CRISISBOOM

Nigeria’s main trade unions have called for a nationwide strike and mass demonstrations from Monday to protest over the government’s scrapping of fuel subsidies.

Petrol prices have more than doubled since Sunday, when the subsidy was withdrawn. Taxi, bus and motorcycle fares shot up similarly, causing widespread anger and sparking two days of small but vocal protests in the major cities.

Cheap petrol – a litre cost 65 naira ($0.41), before January 1 – has for years been one of the only benefits most Nigerians get from the government. The National Labour Congress and Trades Union Congress said on Wednesday that if the subsidy was not reinstated they would launch “indefinite general strikes, mass rallies and street protests”, starting on January 9.

“All offices, oil production centres, air and sea ports, fuel stations, markets, banks, among others will be shut down,” the unions said in a joint statement. “We advise Nigerians to stockpile basic needs, especially food and water.”

Though Nigeria is a major oil exporter, corruption and the poor state of its refineries mean most of its petrol is refined abroad and imported.

The fuel subsidy cost the government $8bn in nine months to September last year. Opaque systems for procuring and selling petrol allowed a handful of powerful local oil marketers to pocket vast sums.

Goodluck Jonathan, Nigeria’s president, and his economic team are trying to cut the government’s huge running costs, which soared in the run-up to the 2011 elections. They say the fuel subsidy is unsustainable.

“Subsidies should be for production and not consumption,” Lamido Sanusi, Nigeria’s central bank governor, told the BBC.

Economists and the International Monetary Fund agree. Selling fuel at a market-linked price, currently about 140 naira at filling stations, should encourage investment in refineries.

The government says it will use the money saved for investment in infrastructure, as well as for public transport, health and education. Yet decades of high level corruption, mismanagement and poor service delivery mean that few people believe it will happen. In the northern city of Kano, thousands of protesters took over the main square on Wednesday to voice their anger. They forced several petrol stations to close.

Similar scenes occurred in Lagos on Tuesday, with demonstrators blocking several main roads.

The sharp increase in petrol prices will also have a knock-on effect on basic goods, hitting the pockets of Nigeria’s 160m people, most of whom live on less than $2 a day. Previous governments have pledged to withdraw the fuel subsidy but have backed down amid a public outcry.

While the government announced its intention to do so months ago, few believed it would happen so quickly, or that there would be no phased withdrawal.