Government

Emmanuel Kachikwu Defends Fuel-Price Increase Amid Strike Threat

Published

9 years ago

May 16, 2016

Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu defended the government’s decision to increase the price of gasoline as averting an even larger fuel shortage and financial crisis, as the country’s main unions threatened indefinite strikes over the increase.

“If we did not do what we are doing now, the queues will be back in very full force, there’ll be complete social disruption,” Kachikwu told lawmakers in the capital, Abuja, on Monday. “Governors will not pay salaries, the federal government in fact will not pay salaries, probably members of this honorable house” will be affected also, he said. “That’s simply the reality.”

Last week Kachikwu increased the cap on the gasoline price last week by 67 percent to 145 naira ($0.73) per liter (0.26 gallon). The move was necessary to attract private importers, who will be able to recover their costs and help end fuel shortages that have persisted for months in the OPEC-member country, he said during the announcement.

Nigeria’s two main union federations have threatened an indefinite strike to shut down offices and businesses by May 18 if previous gasoline prices aren’t restored. The unions accused President Muhammadu Buhari, who won elections last year pledging not to increase the price of fuel, of betraying his promises.

Militant Attacks

When Buhari’s predecessor, Goodluck Jonathan, attempted to raise fuel prices and end subsidies in 2012, he was faced with a crippling national strike by the unions and civic groups until he partially reinstated them.

A major oil-exporter, Nigeria relies on fuel imports to meet more than 70 percent of national supply as the four state-owned refineries with a capacity for 445,000 barrels of crude per day produce only a fraction of that because of poor maintenance and mismanagement.

Kachikwu told Parliament the cap only applies to fuel supplied by the National Nigerian Petroleum Corporation, which he also heads, while other retailers can sell fuel for higher.

A resurgence in militant attacks in Nigeria’s oil-producing Niger River delta region has cut output by as much as 600,000 barrels a day to 1.4 million a day, Kachikwu said. The nation’s output hasn’t fallen this low on a monthly-average basis since 1989, according to data compiled by Bloomberg.

“Our budget is based on 2.2. million barrels a day,” he said. “It’s critical for this government that we get back to these numbers as fast as we can.”