President Jonathan trying to win acceptance for oil subsidy removal | Irish Sun

President Jonathan trying to win acceptance for oil subsidy removal

Yemisi Akinbobola - Africa Renewal Tuesday 17th April, 2012

• Nigeria scraps oil subsidy in effect since 1973

• Nigerians face doubling of gas prices

• Government, caught off guard, tries to stem fallout

One would think that being a citizen of a country with the second-largest oil reserves in Africa came with some perks.

Not so in Nigeria where scores of people are up in arms after being stripped of a petrol subsidy in effect since 1973. The price of gas at the pumps more than doubled, sparking massive protests around the nation in early January.

Prior to the subsidy's removal, the pump price of fuel was 65 naira ($0.40) per litre, against a landing cost of N139. The government therefore contributed a N73 subsidy, for an annual total of N1,200 billion (US$7.6 billion), or 2.6 per cent of the country's GDP. Divided among nearly 160 million people, the gross domestic product (GDP) averages just $1,695 per person annually.

With 37.2 billion barrels of proven oil reserves, Nigeria is the continent's largest oil producer. Yet Nigeria is the only member of the Organization of Petroleum Exporting Countries that needs to import refined fuel, and often suffers scarcities.

Most economists, both in Nigeria and abroad, believe removal of the subsidy is a necessary step towards long-needed reform, since the country can no longer sustain the cost. Political analyst Garba Sani points to the colossal sums spent on the subsidy, N3,700 billion ($23 billion) in 20062011 alone.

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