Nigerian fuel importers’ union said yesterday it would shut down jetties and depots from July 23 if the government did not pay outstanding gasoline subsidy payments, which are a massive drain on Africa’s second biggest economy.
President Goodluck Jonathan tried to end fuel subsidies on Jan. 1, prompting more than a week of strikes and protests after the petrol price more than doubled. Jonathan ended the strikes by partially reinstating the subsidy. The Finance Ministry said on June 20 it had cleared all outstanding subsidy payments following a pause to carry out a probe into the fuel marketers. The ministry was not available for comment yesterday.
The minister of state for finance said in June Nigeria only had 370 billion naira ($2.29 billion) left to pay subsidies, out of the 888 billion in the 2012 budget.
The central bank has said the subsidy budget will run out well before the end of the year, which means they will need to raid savings to pay for it. Powerful state governors have said they will take the federal government to court for what they call “illegal” over-budget subsidy payments.
The Jetty and Petroleum Tank Farm Owners of Nigeria (JEPTFON), representing fuel marketers, said government non-payment of fuel subsidies was a breach of contract.
“Until the above demands are met, the association has no option than to shut down its operations nationwide and suspend workers with effect from July 23,” a JEPTFON statement said.
A strike by JEPTFON staff and shut down of its operations could result in fuel shortages because Nigeria relies on imports for most of its gasoline and diesel needs.
Fuel marketers said on July 2 they might stop importing fuel into Africa’s most populous nation for the third quarter of the year due to outstanding subsidy payments of 200 billion naira.
A parliamentary probe into the subsidy scheme in April found it was riddled with fraud that had cost Nigeria $6.8 billion in just three years – equal to a quarter of the national budget. It was one of the biggest corruption scandals in the history of Africa’s top energy producer.