Bloomberg: Oil’s Slump Gives Nigeria Chance to End $7-Billion Subsidy

The tumbling oil prices that have slashed Nigeria’s revenue and roiled currency and stock markets in Africa’s biggest economy may have a silver lining: an excuse for the government to scrap fuel subsidies that cost as much as $7 billion a year.

It’s an opportunity President Goodluck Jonathan, concerned that such a move would provoke protests before his bid for re-election in February, may not seize, analysts say.

“Politics often trumps prudence and there’s an entrenched social expectation for fuel to be subsidized,” Gareth Brickman, an analyst at Johannesburg-based ETM Analytics, said in a Nov. 28 e-mailed response to questions. “The last time subsidies were reduced there were widespread protests, and given how contentious the political environment is in Nigeria with the elections and on-going ethnic divisions, it is likely this will be the case again.”
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