Nigerian court declares fuel deregulation illegal - lawyer

ABUJA (Reuters) - A Nigerian court declared illegal on Tuesday plans by the government to scrap price controls on motor fuel, an outcome which could complicate efforts to remove a costly fuel subsidy, the lawyer who brought the case said.

President Goodluck Jonathan attempted to remove Nigeria's fuel subsidy in January 2012, but was forced by a wave of angry strikes and protests to partially reinstate it, albeit at a price increased by 50 percent.

His administration still eventually wants to phase it out and leave the market to determine fuel prices. The subsidy is the most costly single item in the budget.

Bamidele Aturu, a lawyer who brought the case to court said he had sought, and got "a declaration that ... to deregulate the downstream sector of the petroleum industry by not fixing the prices at which petroleum products may be sold in Nigeria is unlawful, illegal, null, void."

The judge Justice Adamu Bello upheld the ruling, he said, because deregulation conflicted with the Price Control Act.

He also upheld a declaration that deregulating the price of fuel was against the constitution, which says the government must "secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity," the lawyer said.

The government is likely to appeal the case, and even if it loses, it might still be able to fix a price that is at or very near the market price, which would de facto deregulate it.

Despite pumping around 2 million barrels of oil a day, years of mismanagement have left refineries defunct, and Nigeria depends on imported fuel for 80 percent of its fuel needs.

Critics of the subsidy say it is wasteful, riddled with corruption and ultimately fills up the fuel tanks of the middle classes at the expense of the poor and of investment in infrastructure.

A parliamentary investigation last year found the administration of the subsidy had facilitated billions of dollars of corruption, with around half the fuel that marketers were claiming subsidies on never delivered.

But Nigerians are very emotionally attached to the subsidy, and many see cheap fuel as the only benefit they get in an oil rich state in which corruption bleeds billions of dollars.

(Reporting by Camillus Eboh; Writing by Tim Cocks; editing by Ron Askew)