Dear Moleskine, less than 24hrs into the new year the President of Nigeria-Jonathan Goodluck implemented the uber unpopular fuel subsidy removal scheme much to the chagrin of the Nigerian masses. What a way to celebrate 2012!!

projektcancer:

Nigeria is Africa’s biggest oil producer, but still imports refined petrol. The country produces about 2 million barrels of crude oil daily which is exported to be refined abroad even though the country has 4 refineries with installed capacity of 445,000 bpd. Despite this, the country imports 250,000bpd of petroleum products into the country for sale to its citizens. The price of petrol has increased from 65 naira ($0.40; £0.26) per litre to at least 140 naira in filling stations and from 100 naira to at least 200 naira on the black market, from which many Nigerians buy their fuel. Due to years of mismanagement and systemic corruption, Nigeria does not have the capacity to refine crude oil into petrol and other fuels.

With the majority of Nigerians living on less than $2 per day, cheap petrol is viewed by many Nigerians as the only tangible benefit they receive from the state, hence the widespread anger. In addition, the economy is heavily reliant on petrol (amongst other reasons,due to absence of other requisite infrastructure and services such as electricity). A consequence of this is that other seemingly unrelated items are tied to the price of fuel as has occured from previous price hikes. Due to the absence of stable electricity, petrol generators are a common energy alternative for small businesses and residences.

With this hike there would be a commensurate rise in the cost of production of goods and services which would be transferred on to the consumers leading to widespread inflation. Unfortunately, even when fuel price hikes were reversed in the past, the increase in the cost of goods and services (inflationary reaction) remained.

The removal of the subsidy took effect from Sunday, 1 January 2012 as announced by the Executive Secretary of thePetroleum Product Pricing Regulatory Agency, PPPRA Reginald Stanley.