Nigeria Removes Fuel Subsidy, Prompts Mixed Reactions

Man in Nigeria with his jerrican.
A man waits with his jerrican to buy fuel in Lagos, Nigeria, April 6. Nigeria has suffered a severe fuel shortage in recent months, with long queues developing outside gas stations. STEFAN HEUNIS/AFP/Getty Images

Nigeria's government has announced the removal of a fuel subsidy, meaning that petrol prices are to rise by 66 percent, in a decision that has provoked mixed responses.

The cost of petrol will rise from 86.5 naira ($0.43) to 145 naira ($0.73) per litre after the subsidy—which costs the Nigerian government $2.7 million per day, according to the BBC—was removed. The Nigerian Petroleum Ministry said in a statement that there was no provision for the subsidy in the 2016 budget—which was finally approved by President Muhammadu Buhari on Friday after first being proposed in December 2015—and that the slight rebound in the cost of oil had forced the government's hand.

Nigeria is experiencing a severe fuel shortage, with consumers queuing for hours outside gas stations and often paying way over the new price for black-market products. The West African country, the continent's biggest oil producer, has been unable to meet demand due to several factors, including increased attacks on oil pipelines in the Niger Delta that have forced the evacuation and shutdown of some facilities. "We share the pains of Nigerians but...the inherited difficulties of the past and the challenges of current times imply that we must take difficult decisions on these sorts of critical national issues," said Petroleum Minister Emmanuel Kachikwu in a statement on Wednesday.

A similar decision to remove the subsidy in January 2012 by former President Goodluck Jonathan prompted nationwide protests by consumers and strikes by labor unions, with at least 10 people being killed in violent demonstrations. One of the unions that went on strike in 2012, the Nigeria Labor Congress (NLC), rejected the "unilateral" increase, which it said represents the "height of insensitivity and impunity and shall be resisted by the NLC and its civil society allies," Nigeria's Premium Times reported on Wednesday.

But some Nigerians on social media expressed the view that the removal of the subsidy was a necessary step towards relieving the fuel shortage. Others, such as Nigerian senator Ben Murray-Bruce—a member of the opposition People's Democratic Party—took the opportunity to poke fun at the Buhari administration.

Timing is bad. But there's really no good time for making hard choices. Whats important is making them. #FuelSubsidy

— Amara Nwankpa (@Nwankpa_A) May 12, 2016

Somebody is asking me for advise on how he can survive fuel price increase. What can I say? Personally I'm even considering buying a horse!

— Ben Murray-Bruce (@benmurraybruce) May 11, 2016

According to Malte Liewerscheidt, senior Africa analyst at political risk consultancy Verisk Maplecroft, says that resistance to the subsidy removal is likely to be less pronounced than in 2012. "Paying much more than the official 86.5 naira per liter has been a reality for most Nigerians for a long time, as the subsidized price has rarely been enforced outside [the capital] Abuja and [the biggest city] Lagos," says Liewerscheidt. "Unions aside, the majority of Nigerians are probably willing to accept a price increase if it means crippling fuel shortages come to an end.

During a visit to Nigeria in January, International Monetary Fund chief Christine Lagarde urged Buhari to do away with the subsidy, saying that "not only do they harm the planet, but they rarely help the poor." Nigeria is heavily dependent on the oil and gas industry, with petroleum products accounting for more than 90 percent of the value of its exports.