The past two years have provided positive developments for Niger - the fall of a dictatorial regime followed by internationally lauded elections, increased Uranium mining and strong rates rates of economic growth. Unfortunately, despite improvement in such significant political and economic indicators, serious problems plague Niger.

The Nigerien terrain’s ever-tenuous ability to provide enough grain has been taxed of late by decreasing rainfall and overpopulation, resulting in three food crises in the past seven years. Prices of scarce domestic foodstuffs and costly imports teeter at prohibitively high levels. Adding to Niger’s food insecurity is the high price of fuel, which like food and almost everything else in Niger, must be imported. Recent depreciations of the Euro, on which Niger’s currency is pegged, have worsened the situation by driving up the price of imports.

Thus China National Petroleum Company’s 2008 discovery of oil in Niger appeared to offer some relief to average Nigeriens juggling high food and fuel prices. CNPC estimated that 350 million barrels lay underneath Niger’s Agadem field, and the company signed a deal with the Nigerien government to explore and develop Agadem, construct a refinery in Zinder and build a pipeline connecting the two sites. With production beginning this year at 12,000 barrels per day (bpd) and working up to 100,000 bpd in 2018, the Agadem field and the Zinder refinery could easily cover the 7,000 bpd that Niger consumes, eliminating the need for costly imports. With both the Nigerien and Chinese governments touting the deal as bringing fuel-self-sufficiency to Niger, Nigeriens envisioned drastically lower fuel prices and an easier burden to bear.

However, after the Zinder refinery went online in November the government announced only a modest decrease in fuel prices, from 679 CFA francs to 570 CFA francs for gas and from 655 CFA francs to 577 CFA francs for diesel. Nigeriens were upset, and political activist and opposition politician Aboubacar Mahamadou organized protests that marred the Zinder refinery’s opening ceremony on November 28th. The protests intensified after Aboubacar was arrested, and two protesters were killed by gunfire from police.

Speculation has ensued over why the price of fuel has remained high. Several government spokesmen have stated that stockpiles of more expensive imported fuel must be sold-off before the cheaper domestically produced fuel can be sold. However other reports state that the construction cost of the Zinder refinery has forced the Nigerien government to keep prices high. Under the terms of the contract singed in 2008 between the CNPC and Niger, the refinery was to be constructed at a price of $600 million, however the CNPC has billed Niger for the amount of $980 million, citing unforeseen difficulties with the geography of the building site.
Questions remain as to the justification for the Zinder refinery going $380 million over-budget. Jeuneafrique has reported that no feasibility study was done on the construction of the refinery prior to the signing of the contract, but was only done a year after. Additionally a UNDP audit of the project was of the opinion that CNPC’s surcharges were spurious, and advised the Nigerien government not to pay the full amount. Niger has subsequetly announced that it will carry out its own audit. The results of the audit will be important for the future of Niger, its oil industry and its relationship with China.