* Government set for clash over subsidy cut
* Unions plan "indefinite" strike, mass protests
* Economists say subsidy was hugely wasteful and corrupt
By Tim Cocks
LAGOS, Jan 9 Nigerian unions launch a
nationwide strike on Monday to protest against the axing of a
fuel subsidy which many ordinary people saw as one of the few
benefits they ever got from the state.
Nigeria's fuel regulator announced the end of the subsidy on
Jan. 1 as part of efforts to cut government spending and
encourage badly needed investment in local refining.
Those who support scrapping the subsidy say it only served
to fill the fuel tanks of the rich and middle classes at the
expense of the poor, fed corruption and siphoned off billions of
dollars of public funds to a cartel of fuel importers.
"It was 25 percent of total expenditure in the budget, the
single biggest item - more than education, health and
agriculture combined," said Bismarck Rewane, chief executive of
Lagos-based consultancy Financial Derivatives. "As long as they
spend the money right, removing the subsidy has to be good."
But unions and ordinary Nigerians are furious that
overnight, the price of a litre of petrol has shot up to around
150 naira ($0.93) from about 65 naira before.
Last week thousands of Nigerians gathered in cities,
including the capital Abuja and commercial hub, Lagos, to show
their anger, and mass demonstrations by ordinary Nigerians are
planned to coincide with the strike on Monday.
Oil industry experts say the strikes are unlikely to have an
impact on oil output as production is largely automated and
installations well guarded.
President Goodluck Jonathan pleaded with Nigerians to
support the removal of subsidies in a live televised speech on
Saturday and the lower house of parliament urged both sides to
back down in an emergency session on Sunday.
That looks unlikely, with unions reiterating their threat to
strike for as long as it takes to force a government U-turn,
despite a court ruling that the industrial action is illegal.
"We hope and pray that President Goodluck Jonathan will
listen to the loud voice of the Nigerian people ... by
immediately suspending the fuel price hikes," the unions said in
a joint statement.
Most people in Nigeria live on less than $2 a day and many -
the poor and well-off car owners alike - see cheap fuel as the
only tangible benefit they derive from an oil-rich state where
corruption bleeds billions of dollars from state coffers.
Critics say wealthy politicians could have found savings
within government first and tackled oil industry corruption,
before imposing a sharp hike in fuel prices on the public.
But Nigeria's oil sector has been badly distorted by the
Until the new pricing regime came in, economists say there
was no incentive to invest in its oil refineries and reverse
disrepair caused by decades of corrupt mismanagement.
That means that despite producing 2 million barrels of crude
every day, the country is forced to import costly refined fuel.
The subsidy also spawns smuggling into neighbouring nations
like Benin and Cameroon where fuel is more expensive.
The government estimates it will save 1 trillion naira
($6.17 billion) this year by eliminating the subsidy.
(Additional reporting by Joe Brock and Camillus Eboh in Abuja;
Editing by Ben Harding)