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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Nigeria - Protests Rise Against Government's Decision to End Fuel Subsidies

Sometimes it just doesn’t pay to listen to your drinking buddies in the International Monetary Fund, at least if you want social stability in your country.

On New Year’s Day Nigerian President Goodluck Jonathan blindsided his electorate by directing his administration immediately to end fuel subsidies, a course of action long urged upon him by the IMF’s banksters.

Fuel prices doubled, and in some cases, tripled virtually overnight. Most of Nigeria's 160 million people live on less than $2 a day. Jonathan’s government maintains that it ended the fuel subsidies because in 2011 they cost more than $8 billion and that the revenue is needed to improve the country's ramshackle infrastructure.

Oddly enough, many Nigerians viewed the fuel subsidies as their sole immediate benefit from the nation's vast oil wealth, and most Nigerians lack any real trust in the government after years of deeply rooted corruption.

Unsurprisingly, except perhaps to the IMF’s grotesquely overcompensated bureaucrats, the country has been rocked by violence ever since.

A two-day old general strike has paralyzed the nation and pushed the administration of President Goodluck Jonathan, already battling a number of bloody attacks by the Islamist Boko Haram sect into full damage limitation PR spin.

Concessions?

We don’t need no stinking concessions.

In a statement issued by Nigerian Justice Minister Mohammed Adoke on 10 January the government ordered all striking workers back to work, warning their employers would enforce a "no work, no pay policy. Members of the public who are under contractual obligations as employees in the public and private sectors are advised to respect the terms of their contract of service and report to their duty posts."

The government’s “tough love” policy is winning few adherents. Nobel laureate Wole Soyinka has warned that due to the government’s incompetent policies, the nation is heading inexorably towards civil war. Nigerian Senate President David Mark echoed Soyinka’s remarks.

At least six people were killed on the first day of protests, including one person allegedly shot by police in Lagos, Nigeria’s largest city. On 10 January local media reported that three others were killed in southwestern Ogun and Osun states, including one by a police officer, but authorities have not confirmed the deaths.

If the strike continues, laboring Nigerians who work in the “informal” economy face being squeezed ever more tightly by their disappearing incomes. But, should the strike be called off, any hopes of forcing the government to reverse its decision to end fuel subsidies will fade, and so far, the government has shown no sign of reversing its decision.

So, why should the West care? Isn’t Africa always lurching from crisis to crisis?

Well, energy analysts said that the tension in Africa's top oil producer contributed to rising world oil prices, with Brent North Sea crude on 10 January gaining 83¢ to close at $113.28 a barrel.

Oil production has so far not been affected by the strike, but workers threatened action if the government does not respond to their demands. Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) Lagos head Tokunbo Korodo observed, "We are contemplating shutting down oil production. We are just waiting for the outcome of discussions between labor and government today. The outcome of that meeting, if not favorable, will lead us to shutting down oil production."

Oil production underpins Nigeria's economy, accounting for roughly two-thirds of government revenues and more than 90 percent of export earnings. Aside from NUPENG’s concerns, analysts surmise that Nigeria’s oil production has been unaffected up to now for a number of reasons unconnected with government policies on fuel subsidies, including the fact that much of the industry is centered offshore and many operations are automated, along with the reluctance of many oil workers to shut down production, considering it a last resort and knowing it could take a number of days to start facilities back up again.

So, where do things go from here? Unclear as it is, foreigners might remember that Nigeria is OPEC’s leading African exporter, pumping roughly 3.3 percent of the world’s needs, 1.134 billion tons a year, roughly 1.93 million barrels per day.

And Washington, currently self absorbed by the Republican primaries, might also pay events in Abuja a tad more attention, as Nigeria is the third largest source of its oil imports, whose 1.174 million bpd shipments to the U.S. are greater than Saudi U.S. exports, exceeded only by Canada and Mexico.

By. John C.K. Daly of Oilprice.com


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