Nigeria regulator announces end to fuel subsidies

By Felix Onuah and Camillus Eboh

ABUJA (Reuters) - Nigerian authorities announced on Sunday that a controversial plan to scrap fuel subsidies will be effective from January 1, a move likely to lead to strikes and street protests.

The plan is unpopular with Nigerians, many of whom see cheap fuel as the only benefit they get from living in Africa's top crude oil exporter. Previous attempts to remove the subsidy had prompted strike action and street protests, and many expect this one to be no different.

"The Petroleum Products Pricing Regulatory Agency wishes to inform all stakeholders of the commencement of the formal removal of the subsidy on Premium Motor Spirit," said a statement by the Petroleum Products Pricing Regulatory Agency

(PPPRA).

"Petroleum products marketers are to note that no one will be paid a subsidy on PMS discharges after 1st January 2012," said the statement signed by PPPRA executive director Reginald Stanley.

Going ahead with the plan will save the treasury huge amounts of cash that critics like the International Monetary Fund (IMF) said was being wasted on spending whose main beneficiary was fuel importers.

Nigeria produces more than 2 million barrels per day of crude oil but a lack of investment in refineries and infrastructure means almost all of this is exported, while refined fuel products such as petrol have to be imported at great cost, making the subsidy a huge drain on public finances.

Finance Minister Ngozi Okonjo-Iweala told a town hall forum last month that the measure will save over 1 trillion naira in subsidies in 2012.