647.849El sector de la construcción y vivienda en Canarias

Nwafor et al. (2006 p. 3) examined two types of subsidies, the explicit and the implicit.

Explicit subsidy is the difference between production cost and selling price. Implicit subsidy is the type of subsidy that is observed in the exploitation of wasting assets such as crude oil. It refers to the difference between the opportunity cost of a wasting asset and the present selling price. Nigeria has both types of subsidy which the government

54 withdrew in January, 2012 (BBC Africa, 2012). Governments use their oil endowments through subsidy as a social means that is intended to benefit the large majority of the poor in their society as well as to promote industrial production (Birol et al., 1995 &

Nwafor et al., 2006). Although the Nigerian government’s intention was good regarding oil subsidy, the subsidy was abused by certain individuals (Dada, 2012; Ogbonnikan, 2012

& Okonjo-Iwela, 2012), which is why it was eventually removed (partially). Prior to the subsidy withdrawal, the (present) Nigerian minister of Petroleum Mrs. Allison-Madueke argued that “the subsidy is not getting to the masses it is created to take care of...; it is the retailers that are benefitting from it” (Abubakar, 2011 & Sweet Crude, 2011a). Before her comments, Nigerian state governors had earlier advocated the total removal of oil subsidy in the country so that they could benefit from the money thus saved and be able to pay the newly introduced minimum wage of 18,000 Naira per month (£72). This would avert strike action organised by the NLC, which represents less than 20 percent of the country’s population (BBC Hausa, 2011b & Olanrewaju, 2011). The move by the state governors was, however, opposed by widespread condemnation from the general population (Olanrewaju, 2011). However, despite this condemnation, the government suddenly announced the withdrawal of its fuel subsidy on 1^st January, 2012, which resulted in a sharp petrol price increase from 65 Naira (about £0.26) to 140 Naira (about

£0.60) (BBC Africa, 2012). After the announcement, there was a mass protest across the country that lasted for 16 days (BBC Africa, 2012). It was only after the leadership of the National Assembly intervened that the government partially backtracked on 16^th January, 2012, by approving the reduction of the pump price of petrol to 97 Naira (about £0.40) per litre.

The call for the removal of the oil subsidy among oil producing nations , especially DC, is not new. Birol et al. (1995) indicated that the move started in the late 1970s and reached its peak in the 1980s. Birol et al., who support subsidy removal, argued that the oil exporting countries of the DC have a high level of subsidy and low efficiency of energy use, resulting in the waste of resources needed for their development. Birol et al . maintained that for the oil exporting DC to advance, they need to allow their energy pricing to reflect the opportunity costs, to enhance economic growth. They summarised the impacts of oil subsidies on economic growth, as follows (Birol et al., 1995, p. 210):

55 1. Subsidies for consumers bring about excessive domestic demand, which leads to lower export that consequently decreases the foreign exchange revenues which would have funded development activities.

2. Subsidies for producers bring about excessive supply, leading to a rapid depletion of the resources that provide the main source of earnings.

3. Subsidies do not necessarily reach the target poorer segment of the population.

Rather, most of the beneficiaries are in the higher income groups of the society that can afford the unsubsidised oil.

Although Birol et al.’s arguments were quite strong, given the present poor economic situation of Nigeria (FAO, 2010a), their arguments can be criticised for being unfair, because they were based on assumptions that did not reflect the situation of the Nigerian oil crisis and the economic hardship of the people (Nwafor et al., 2006 & Bisalla

& Muhammad, 2012). Nwafor et al. (2006) have shown that in Nigeria, the increase in the price of petroleum products resulted in the increase in the prices of all other goods and services. They therefore concluded that subsidy removal would increase national poverty, unless the money saved was used in a way that would bring about changes for the household economy.

Electricity is being subsidised in Nigeria in a similar way to fossil fuels. The government has recently announced it will cut down its funding of this subsidy, by deregulating the sector as part of its commitment to meeting the country’s electricity demand (NBS, 2010,

& Sweet Crude, 2011b). Sweet Crude (2011b) reported that the FG has released the sum of 177 billion Naira (about £708 million), for subsidies to ensure an orderly transition from subsidy to market determined prices of electricity. As part of the subsidy removal process, the Nigerian Electricity Regulation Commission’s (NERC) chairman, Dr. Sam Amadi, announced an increase in the electricity tariff from 1st July, 2011, from 8.50 Naira (3.4 Pence) to 10.00 Naira (4 Pence) per unit (Alohan, 2011c & Sweet Crude, 2011b). This announcement did not spark any civil unrest in the country like that for oil mentioned

56 solve the situation of fuel scarcity in the nation is wrong”, because when one looks at the situation of diesel supply that was deregulated some years ago, this fuel still faces similar problems to other petroleum products in terms of supply and availability in the country as discussed above. Unsurprisingly, therefore, the current petroleum scarcity in the country to date has not changed from its previous situation prior to the subsidy withdrawal (Agba et al., 2012b).