/ 13 January 2012

Talks on hold as Nigeria oil workers continue strike

Nigerian workers took to the streets for a fifth day of strikes over the lifting of a popular fuel subsidy on Friday, after trade unions broke off talks with President Goodluck Jonathan and said they would not restart until Saturday.

The government scrapped subsidies on petrol imports from the beginning of the year, more than doubling the pump price to around 150 naira ($0.93) a litre from 65 naira, and sparking bitter protests across the country.

Pressure is mounting on Jonathan to reach a deal. Nigeria’s main oil union has threatened to shut down output from Africa’s biggest crude producer from Sunday if the government does not reinstate the subsidy.

Industry officials doubted unions would be able to stop crude exports completely because much of production is automated and Nigeria has crude stored in reserves, but even a minor outage could have a significant impact on the economy.

Tens of thousands of Nigerians have been demonstrating in cities across Africa’s most populous nation since Monday after the government said the subsidy was gone for good.

In the heaving commercial hub Lagos, thousands continued protests, many were determined to carry on until government met their original demands.

“Nigerians are not happy with what is happening. We will walk all the way from Lagos to Abuja to fight the government,” said Linus Antony, a 42-year-old businessman.

“Listen to the people when you negotiate. We will accept 65 naira [pump price] no more, no less,” another said, standing in front of crowds dancing as musicians played on a makeshift stage.

In many parts of the mostly Muslim north of the country protests stopped and crowds gathered to pray in mosques. Some were resigned to a compromise being made.

“If the government will be sincere with what it pays to subsidise fuel, the labour and government should agree on a common front,” said Abdullahi Mustapha, a civil servant in Kano, the second largest city in Nigeria after Lagos.

“My wish is that any decision should not hurt Nigerians, the economy or this great nation.”

Ministers and some analysts say the subsidy fuelled corruption, favoured richer people who could afford cars and drained resources from Africa’s second largest economy.

Nigeria’s main unions said they had “fruitful” talks with Jonathan on Thursday night, leading to media speculation that the two sides might be approaching a compromise.

“There are no talks today because we have to go back to our members and discuss the options with all the stakeholders. We are a democratic organisation,” said Isa Aremu, vice-president of the Nigerian Labour Congress (NLC) union federation.

Protests muted
“There will be protests today but they will be minimal because we are conscious of the security situation given it is Friday and Friday is a day of prayer [for Muslims],” Aremu added.

Nigeria, whose population is roughly evenly split between Christians and Muslims, has been rocked by a series of attacks by Islamist militants.

The central bank governor, Lamido Sanusi, told Reuters the strikes were costing the economy more than $600-million a day.

Presidency sources say the sticking point in negotiations is the price of petrol and both sides may have to concede to a temporary fixed price, somewhere between 65 and 150 naira a litre.

Several newspapers said a likely outcome may see petrol capped at 100 naira a litre until the subsidy is removed fully in April or later. This could give the government time to spend on promised social programmes and local refinery maintenance.

It is not clear if unions are open to a phased subsidy removal. Sanusi said the key for the government was to get unions to agree to subsidies being removed, even if it was in the future.

The threat of a cut in oil output, which provides the government with 80% of its revenues, was a deciding factor in starting negotiations, sources said.

Worries over Nigerian oil supplies have pushed up global oil prices in the last two days.

Nigeria produces more than two million barrels of crude oil per day and is a key supplier to the United States, Europe and Asia. Crude exports provide Nigeria with more than 90% of foreign exchange revenues.

Economists say keeping the subsidy in place would force Nigeria into huge external borrowing, but Nigerians, many of whom live on less than $2 a day, see it as their most tangible welfare benefit.

Despite holding the world’s seventh-largest gas reserves and producing over two million bpd of crude, decades of graft and mismanagement mean Nigeria has to import almost all of its fuel needs. — Reuters