The government of Nigeria, Africa’s largest oil producer and a member of the Organization of Petroleum Exporting Countries, is taking the politically sensitive step of moving to end fuel subsidies.
President Goodluck Jonathan says the government will use money saved by ending subsidies, which otherwise would cost an estimated $7.5 billion next year, on infrastructure and social programs.
Nigeria recently has been producing about 2.3 million b/d of oil and consuming about 280,000 b/d. Its productive offshore continues to yield discoveries (OGJ Online, Nov. 7, 2011).
Because utilization is low at the country’s four refineries, which have total capacity of 445,000 b/d, Nigeria imports oil products.
Subsidies keep domestic oil prices at about 40¢/l.
Trade unions have threatened to strike if subsidies end next year as proposed.
