[stop-imf] IMF Urging Gas Dereg in Nigeria

[Robert Weissman]

http://www.corpwatch.org/issues/dereg/featured/2001/solukoya.html

Nigeria's Gas Crisis: Suffering in the Midst of Plenty

                           By Sam Olukoya
                           Special to CorpWatch
                           May 14, 2001

                           LAGOS -- The energy deregulation bug appears to
have spread all the way from California to Nigeria. The World
                           Bank and its financial partner the
International Monetary Fund (IMF), are urging the government to deregulate
                           the fuel prices in Africa's most populous
country. Under the planned deregulation, which is part of a
                           wide-ranging privatization program, the
Nigerian National Petroleum Corporation --a state monopoly-- would be
                           broken up in order to privatize the marketing
of petroleum products.

                           Deregulation is an apparent move to increase
the price of petroleum products especially gasoline, which now
                           sells for 20 cents a liter. The government says
at this price, it is subsidizing fuel to the tune of two billion US
                           dollars a year. The proposed deregulation would
double the price of gas. Foreign oil corporations operating in
                           Nigeria, like US-based Shell and Chevron, the
French oil giant Elf and Italy's Agip, stand to benefit from the
                           proposed policies which would allow them to
sell crude oil to refineries at higher prices.

                           There is no clearer example of the disparity
between the haves and have nots than Nigeria's oil industry, which
                           should be the country's economic live wire.
Nigeria is the world's sixth largest oil producer, but the country is a
                           classic case of suffering in the midst of
plenty. Despite a daily output of more than two million barrels of crude
                           oil, Nigeria faces one of the worst fuel crises
in the world because its oil refineries are so deteriorated they can
                           not process the 150,000 barrels needed daily
for local consumption. Besides the poor state of the refineries,
                           irregular distribution, hoarding and smuggling
of fuel to neighboring countries where it can be sold for higher
                           prices are also responsible for fuel scarcity.

                           Meanwhile, the World Bank and the IMF say the
higher fuel prices will free up resources for economic
                           development. Nigeria owes international
financial organizations like the IMF and World Bank about 30 billion US
                           dollars. Deregulation is part of fiscal
policies imposed by the IMF and World Bank to pressure the country to pay
                           back its huge debts. The country must also
adopt these policies to qualify for more loans. It is therefore not
                           surprising that government officials buy into
deregulation plans.

                           President Olusegun Obasanjo, who argues that
Nigerians have long been buying petrol in the black market
                           above the official price, has harsh words for
those opposed to the planned deregulation. "My detractors say that
                           I want to deregulate the petroleum product
market. This is not correct. The market is already deregulated," he
                           notes. "What government wants to do is to
inject sanity into the market, so that there will be equity in price and
                           distribution of products. Those who agitate to
maintain the status quo are probably working for the rich cartels
                           and syndicates," adds Obasanjo.

                           But most Nigerians see the planned deregulation
differently. Frequent increases in fuel prices have almost
                           become a part of life in Nigeria. The populace
has learned from past experience when, instead of investing gas
                           revenues in the country's economy, government
officials siphoned off profits into their private bank accounts.
                           For many, the proposed deregulation is yet
another plan by the government to take the country for a ride.

                           Many Nigerians fear higher fuel prices will
have ripple effects on the Nigerian economy. In the face of acute
                           electricity failure, local industries rely on
petrol and diesel to power electric generators.

                           "An increase in the prices of these products
will jerk up the production costs of local industries," argues human
                           rights activist Sylvester Odion-Akhaine. He
says higher fuel prices will encourage the importation of foreign
                           goods which undermines local industries.

                           Despite being a major oil producer, Nigeria
imports gasoline. But even this does not meet local demands. Chaos
                           and vehicular queues stretching for kilometers
is the general scenario in the few gasoline stations with fuel.
                           Motorists sometimes spend several nights at the
gasoline stations before filling their tanks.

                           "Sometimes I spend more of my time queuing in
gasoline stations than driving my taxi," says Lagos taxi driver
                           Joseph Bamidele.

                           But the agony is not just the long wait at
gasoline stations. The chaos at the stations has sometimes led to fires
                           which end up injuring motorists and burning
their vehicles. "When the gasoline stations are chaotic I use public
                           transport rather than go and queue for fuel,"
says Omolara Busari, a Lagos housewife. Some Nigerians end up
                           getting their fuel supplies at very high prices
from neighboring Republic of Benin, a country which ironically does
                           not produce oil.

                           Meanwhile, Lagos taxi driver Fola Olagunju says
deregulation will also lead to an increase in transport fares, a
                           further hardship for the majority of Nigerians
who are too poor to pay higher fares. He fears that this could spark
                           off widespread riots in the streets. "If they
deregulate fuel prices, I will park my car and stay at home so that I
                           don't get caught up in street riots," he says.

                           Many Nigerians feel buying fuel at low price is
the only benefit they get in an oil producing country where basic
                           infrastructures like clean water, electricity,
good roads and telecommunication services are virtually non-existent.
                           Besides, fuel is sold in Nigeria for about the
same relatively low rate as in other oil producing nations like
                           Venezuela, Kuwait, United Arab Emirates and
Saudi Arabia, they point out.

                           Meanwhile, workers, students and other
grassroots movements have vowed to reject an increase in fuel prices.
                           Across the country, angry street protests and
rallies have been held against the planned deregulation.
                           Thousands of students, trade unionists and
others turned out for demonstrations recently held in all the 36
                           state capitals and the federal capital, Abuja.

                           What's more, the powerful Workers Union
threatens a major strike that will bring the country to a standstill if
the
                           deregulation is carried out. Last June,
President Obasanjo backed down from plans to increase fuel prices when
                           workers went on a nation-wide strike. Workers
Union President Adams Oshiomole accuses President Obasanjo
                           of doing the bidding of the IMF and World Bank.

                           "The president has changed his dialect and
started speaking in tongues in the dialect of IMF and World Bank.
                           In fact, he has been hijacked by foreign
interests who asked him to collect from his citizens world prices for
                           petrol when we are not receiving world salary,"
he says.

                           It is understandable that the World Bank and
IMF have come under harsh criticism since the government
                           announced plans to deregulate fuel prices. The
World Bank and IMF structural adjustment programs, which
                           prefer debt servicing to infrastructure
development and social spending, have created enormous problems in
                           Nigeria over recent years. Educational
institutions, health, housing and other public utilities are in decay. The
                           local currency has suffered devaluation and a
foreign debt of 30 billion US dollars is hanging over the country.
                           The consequence of these has been misery and
poverty across the country.

                           Critics see the IMF and World Bank as a major
threat to Nigeria's fledging democracy, which is just two years old.
                           Pius Anyim, President of the Senate accuses the
financial institutions of forcing the government to make
                           commitment on debt servicing even in the face
of scarce resources.

                           Human rights activist Odion-Akhaine argues that
structural adjustment economic and social stability. "When you
                           destroy the productive base of the country,
people lose their jobs, poverty increases and thus tension in the
                           country which could lead to chaos as we have
seen in the past." He fears that the military, which ruled the
                           country for 15 years, could exploit such a
situation to return to power.

                           Meanwhile, foreign oil companies like Shell and
Chevron have a long history of intervening in Nigerian affairs.
                           Under the military dictatorship they regularly
pressured the government to send troops to quell protests against
                           their operations in the Niger Delta. Meanwhile
in November 1999, the new civilian government sent troops into
                           Odi village where youths were accused of
killing 12 police. The entire village was burned to the ground and an
                           untold number of civilians killed probably
reaching into the hundreds, according to Human Rights Watch. So far,
                           they have not taken a public stand on
deregulation.

                           As protests rock the country, pushing through
deregulation policies will prove to further test civilian rule in
                           Nigeria.