Daily Telegraph: What oil costs Nigeria: “Last week, oil workers staged a two-day walk-out in protest at job redundancies at Shell terminals. And yesterday a four-day general strike began over a steep rise in the price of fuel.” (ShellNews.net)

(Filed: 12/10/2004)

Oil has proved a decidedly mixed blessing to Nigeria. Exports are a phenomenal foreign exchange earner - and never more so than at present, with the price at more than $50 a barrel - but have created a dangerous dependency. 

A net exporter of food has become a net importer. Industrialisation has been pitiful. The wildly uneven distribution of wealth, exacerbated by rampant corruption, has led to ethnic unrest, particularly in the eastern, oil-producing states.

In September, Alhaji Asari Dobuko, a warlord in the Niger Delta, from where Nigeria's 2.3 million barrels a day are pumped, advised all foreigners to leave the area and ordered the oil majors to cease production. Last week, oil workers staged a two-day walk-out in protest at job redundancies at Shell terminals.

And yesterday a four-day general strike began over a steep rise in the price of fuel. The Nigeria Labour Congress has threatened indefinite action unless its demands are met in talks with the government. All of which raises the question: are not developing countries better off without the distorting effect of a dominant primary product, such as oil?

A comparison between South Korea and Nigeria would suggest that they are. Forty years ago, each had the same income per head. Since then, that for the Koreans, who are poor in natural resources, has risen to twice the world average. That for Nigeria, which in recent years has added natural gas to its gamut of raw materials, has sunk to one fifth.

The answer is that it depends on how the economy is managed. The democratically elected civilian government of Olusegun Obasanjo, which came to power in 1999 after years of military dictatorship, has begun to move in the right direction, by deregulating the economy through privatisation, and - the cause of this week's industrial unrest - by cutting fuel subsidies.

The second has the laudable aim of making the downstream petroleum sector, which deals with refining and marketing, commercially competitive. But to raise fuel prices by more than 20 per cent at one go, as the government decided last month, would be enough to cause unrest in any country, let alone one that has as many people below the poverty line as Nigeria.

President Obasanjo, who has initiated talks with rebels in the Niger Delta, now faces equally tough negotiations with the unions. On them will depend the future of Africa's leading oil producer, the world's seventh-largest oil exporter and the fifth-largest source of American oil imports.

 http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2004/10/12/dl1202.xml