Although raising fuel prices is a major economic priority for Nigeria, it has been politically difficult to implement. Former President Goodluck Jonathan tried in 2012 and backed down in the face of labor unrest. Similarly, on May 18, the Nigeria Labor Congress carried through on its threat to stage a nationwide strike over the government's decision to raise fuel prices from 87 naira to 145 naira per liter. But this time, participation in the strike has been spotty. On May 17, the National Industrial Court of Nigeria ruled that the nationwide strike should be called off. As a result, local Nigerian Labor Congress chapters stayed at their posts in Abuja while workers in Plateau state and elsewhere walked off the job. Following the ruling, another national union umbrella group, the Trade Union Congress, backed down entirely from its plans to participate in the strike.
Nigeria is accustomed to strikes. Energy sector unions are particularly fond of staging such demonstrations over contentious issues like fuel subsidies and prices or refinery privatization. Compared with past demonstrations, however, the May 18 response has been muted. The government will quickly mobilize other labor groups to pressure the National Labor Congress to bring its chapters back to work. While the organization still hopes to leverage the fuel price issue to gain concessions on key matters such as the minimum wage, tribal elders and industry groups do not want to shut down the Nigerian economy in the process.
Raising fuel prices has been on Abuja's list of priorities for some time. The most ambitious attempt to do so came in January 2012, when then-President Goodluck Jonathan eliminated the country's subsidy program, causing fuel prices to soar from 65 naira to 140 naira per liter. The nation plunged into a week of labor protests, and Jonathan ultimately backed down, reinstating the subsidy. But the 2012 strike was larger than the current round, including not only the National Labor Congress but also the Trade Union Congress and two critical oil workers' unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan) and the National Union Of Petroleum and Natural Gas Workers (NUPENG).
This time, Pengassan and NUPENG have chosen to support the government's fuel price hikes while calling for a higher minimum wage to balance them out. In addition, some tribal elder groups, such as the National Elder Council, have come out in favor of the subsidy reductions. Though the government has tried to offer wage increases to win support from the National Labor Congress, the group has stayed focused only on tariff and fuel price increases. As its support continues to wane, though, the National Labor Congress is beginning to change its tack and may have to accept whatever concessions it can get.
Two structural shifts in Nigeria account for the difference between the 2012 backlash against subsidy reform and today's more placid response. First, the Nigerian government is under considerable financial strain as oil prices hover between $45 and $50 per barrel for most of Nigeria's oil blends. In response, the government has tried to maintain the value of the naira, which has been pegged to the dollar at a 197-1 ratio since February 2015 to prevent import prices from increasing significantly. Meanwhile, Nigeria's oil refiners are unable to operate at full capacity, forcing the government to import significant quantities of refined products. Impaired refining capacity and the naira peg have made maintaining low fuel prices expensive for Abuja. The government will not be able to sustain them for long unless it makes the politically difficult decision to break the naira peg.
Second, current President Muhammadu Buhari relies on the support of entirely different groups than his predecessor did. The new president has made it his priority to end corruption nationwide and to clamp down on smuggling and theft in the oil and natural gas sector. By contrast, Jonathan did not target smuggling rings, which formed his support base. When Jonathan tried to remove the subsidy in 2012, protesters criticized him for not cracking down on corruption and smuggling first. Buhari is tackling both issues, and he has effectively articulated this strategy to his primary constituencies in the north and southwest.
But the drop in oil prices is by far the greatest difference from 2012, when oil still cost around $100 per barrel. Low prices make normalizing domestic fuel prices far easier, and so far, Buhari has managed to implement the first phase of the price increase. But if oil prices rise, he may find it difficult to continue. Average Nigerians use fuel prices to measure the government's economic performance. If prices return to the $80-$100 range before the next presidential election in 2019, Buhari risks losing ground to rival parties, such as the People's Democratic Party, especially in his northern stronghold.
For now, Buhari is safe and can pursue the long-delayed plans to normalize Nigeria's fuel prices. But his ultimate course — and level of success — will depend in large part on the trends in world oil prices, a factor beyond his control.
