INTERVIEW-Nigeria strikes costing economy $617 mln a day- cbank

Reuters

12 January 2012

INTERVIEW-Nigeria strikes costing economy $617 mln a day- cbank

* Nigeria govt, unions must agree a subsidy removal deadline

* Subsidy removal to push inflation to 14-15 pct by mid-2012

* Nigeria oil business needs to go after corruption (Adds quotes, details, background)

By Joe Brock

ABUJA, Jan 12 (Reuters) - Nigeria's nationwide strikes against the government's removal of fuel subsidies is costing Africa's second largest economy around 100 billion naira ($617 million) a day, the central bank governor told Reuters on Thursday.

Nigeria removed subsidies on petrol imports on Jan. 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.