Nigeria oil union threatens the government

BRENDAN TREMBATH: Conflict between the Nigerian government and the country’s unions over the abolition of a fuel subsidy has escalated sharply. The dispute has already been felt in the world wide oil market, where the price of crude has risen by $2.

At the same time, Nigeria’s president Goodluck Jonathan is grappling with insurgent violence in the north.

Mary Ann Jolley reports.

MARY ANN JOLLEY: Nigeria produces two million barrels of crude oil a day but remains astonishingly poor. Seventy per cent of Nigerians live on less than $2 a day. Since oil subsidies ended at the start of the year the price of fuel has doubled to close to a $1 a litre, driving up the cost of living and running business.

Tens of thousands have taken to the streets to protest in the last few days.

PROSTESTER: Nigerians are reacting to the harsh economic policies of President Jonathan and they are saying, look for many years we have received those. The government of PDP (Peoples Democratic Party) have deceived us and we’re saying now enough is enough.

MARY ANN JOLLEY: By cutting subsidies the government will save close to $8 billion a year. The president has pledged to use the money to fund desperately needed infrastructure.

But after decades of corruption, where officials have stolen the nation’s oil profits, ordinary Nigerians have no faith the government of Goodluck Jonathan will be any different from its predecessors.

The International Crisis Group’s West Africa Project director, Gilles Yabi, says cutting subsidies is sound economic practice.

GILLES YABI: We find that you have subsidies and then you have low prices. It means that private investors would find it more useful to import oil from outside the country instead of producing refined oil in the country.

MARY ANN JOLLEY: So if the subsidies are removed then perhaps people will have the incentive to invest in refineries?

GILLES YABI: Yes, exactly. It is basically trying to change the incentive structures.

MARY ANN JOLLEY: The biggest problem with President Goodluck Jonathan’s decision to cut subsidies is the timing.

It comes off the back of a spate of violent attacks on Christians in the Muslim-dominated north. A terrorist organisation called Boko Haram, which means “western education is evil”, has claimed responsibility for bombing several churches.

The international Crisis Group’s, Gilles Yabi.

GILLES YABI: The terrorist group used to target all the same security, military personnel. Now they are targeting civilians and trying to provoke a situation of very high tension and violence between the two main religious belts of the country; the Christian and the Muslim. And that is very dangerous in a country like Nigeria where you have basically a population which is split between Muslim and Christian.

MARY ANN JOLLEY: Nigeria has a tradition of rotating presidents between the north and the south. The election of Goodluck Jonathan, a Christian from the south breaks this tradition, and many believe elements in northern Nigeria are resentful and trying to destabilise his government.

Gilles Yabi again.

GILLES YABI: I suspect that the violence that we are seeing now is not just the result of Boko Haram it’s also the result of probably manipulation by some of the politicians based in the north who are still very unhappy with the victory of Goodluck Jonathan.

MARY ANN JOLLEY: Gilles Yabi says President Goodluck Jonathan need to focus on social and economic policies if he is to bring stability to the country.

BRENDAN TREMBATH: Mary Anne Jolley reporting.

ABC Australia