An man protest with a placard saying ' President ...
An man protest with a placard saying ' President Jonathan should go or die like Gadafi' on the removal of a fuel subsidy by the government in Lagos, Nigeria, Thursday, Jan. 12, 2012. A union representing 20,000 oil and gas workers in Nigeria threatened Thursday it would shut down all production starting Sunday to take part in the crippling nationwide strike over spiraling fuel prices.(AP Photo/Sunday Alamba)
ABUJA (Reuters) - Nigeria's nationwide strikes against the government's removal of fuel subsidies is costing Africa's second largest economy around 100 billion naira (403 million pounds) a day, the central bank governor told Reuters on Thursday.
Nigeria removed subsidies on petrol imports on January 1, more than doubling the price of petrol to around 150 naira per litre and pushing up the cost of transport, food and other goods.
Lamido Sanusi said he expected inflation to rise to around 14-15 percent by the middle of this year, up from 10.5 percent now as the impact of subsidy removal is felt on prices.
"Clearly inflation was always going to go up with the removal of subsidy. I think what we've seen is the immediate shock impact of a sudden removal and things will settle down," Sanusi said in his office in the capital Abuja.
"It took us 2-1/2 years from 2009 to come down to single-digit from 15.6 pct. I think a realistic target if we actually hit 15 percent, I think we will be looking at end of 2013 before we come back to single-digits."
Nigerian President Goodluck Jonathan is meeting with workers' unions on Thursday to try and reach a compromise after a four day stalemate saw tens of thousands of Nigerians take to the street and Nigeria's economy grind to a halt.
Sanusi said it was positive that negotiations were ongoing but he urged government to agree a deadline with unions for removing fuel subsidies altogether, rather than leaving it open ended, which could lead to public demonstrations in the future.
"I think it's time to make a deal ... any kind of compromise should have a final deadline for removal of subsidy," he said, adding that options could include capping prices at 100 naira a litre and phasing out subsidies, although he said details would have to be left to the government and workers.
Economists and the central bank say the subsidy fuelled corruption and keeping it in place would force Nigeria into huge external borrowing, but most Nigerians, who live on less than $2 a day, saw it as their most tangible welfare benefit.
Despite holding the world's seventh-largest gas reserves and producing over 2 million bpd of crude, decades of graft and mismanagement mean Nigeria has to import almost all its refined fuel needs.
The protesters have been asking why the government doesn't fight the corruption within the oil industry and invest in local refining before cutting subsidies.
Despite Jonathan conceding during the strikes that Nigeria's oil industry suffers from widespread corruption, no one has lost their job and no one has been arrested.
Sanusi won widespread praise for sacking the heads of several major Nigerian banks, helping to turn around a banking crisis in 2009, the year he became central bank chief. He thinks the same should be done within Africa's largest oil industry.
"If I was in charge of the area (oil) I would do exactly what I did when I was in charge of the central bank but you've got to ask the people in charge of the area what's happening."
(Writing by Joe Brock)
New York Times
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