BBC
Bola Tinubu has picked his first big fight with trade unions by deciding to scrap fuel subsidies.
An off-the-cuff remark by Nigeria’s new president during his inaugural speech caused chaos with snaking queues across the country at petrol stations.
After he had been sworn in on Monday, Bola Tinubu took his eyes off the teleprompter during his address to say: “The fuel subsidy is gone.”
He was referring to a decades-long subsidy that has kept down the price of petroleum products.
The 71-year-old politician gave no timeframe or any more details about what is a major policy move. When a president last tried to remove the subsidy 11 years ago, protests erupted.
Within hours of Mr Tinubu’s first address, hundreds of people had poured on to the streets, either in their cars or on foot with yellow jerrycans, to grab what they believed to be the last drops of fuel to be sold at a government-fixed price.
But only a few were lucky – many filling stations stopped selling altogether, while others unilaterally increased prices by more than 200%, triggering chaos and an artificial scarcity.
By the time the president’s team clarified that the scrapping of the subsidy would not come into effect until the end of June – in line with the outgoing administration’s budget – it was too late to stop the panic.
By Wednesday, even the state-owned oil company had said it would be raising the price of petrol.
Transport fares have already shot up, commuters are stranded at bus stops and the powerful labour union is now readying itself for a confrontation with the new government.
“By his insensitive decision, President Tinubu on his inauguration day brought tears and sorrow to millions of Nigerians instead of hope,” Nigeria Labour Congress (NLC) leader Joe Ajaero said in a statement.
Despite its oil riches, Nigeria is unable to refine crude locally to meet demands.
The four state-owned refineries are moribund, forcing the country to import refined petroleum products which are then sold at a price fixed by the government.
So while people in the UK and Ghana, for example, were forking out £1.44 ($1.80) or 14 cedis ($1.24) respectively for a litre of petrol in May, Nigerians paid 185 naira ($0.40) – despite all three countries buying it from the same international market.
This has been the practice in Nigeria since the 1970s and most residents have grown up insulated from paying the actual price of petrol.
But Mr Tinubu says Nigeria can no longer do this because of dwindling revenue: the government has already set aside $7bn to subsidise fuel for the first six months of this year.
This amounts to 15% of the budget, more than the combined allocations for education (8.2%) and health (5.3%).
Subsidies are not necessarily bad. Many countries offer them in sectors ranging from agriculture to electricity in order to keep costs down for citizens.
But of major concern to Nigerians is corruption. Government agencies give conflicting figures for the amount of fuel imported, while dubious sellers have been known to divert the fuel to nearby countries to get higher rates.
Ironically, President Tinubu was at the head of the resistance in 2012 when a government last tried to end the subsidy.
He wrote then that the government had “tossed the people into the depths of the midnight sea”, in a blistering attack on the policy, which was subsequently reversed.
Yet there is more of an acceptance now that the subsidy should be scrapped to free up money for essential public services like transport, health and education.
Analysts expect fuel to sell from anywhere between 250 naira and 350 naira after the current upheavals.
