(Updates with comment from bank spokesman in sixth paragraph.)
Jan. 16 (Bloomberg) -- Nigerian labor unions suspended protests while continuing a general strike over fuel subsidies in Africa’s top crude producer after President Goodluck Jonathan’s announcement of a gasoline-price cut fell short of their demands.
The protests were suspended “because of security concerns” and fear that “certain elements want to hijack” them, Nigeria Labour Congress President Abdulwaheed Omar said on Lagos-based Channels TV. The unions will meet in Abuja, the capital, and probably announce their decision on the strike at 1 p.m., Trade Union Congress President Peter Esele said by phone.
Jonathan earlier announced a cut in gasoline prices to 97 naira a liter after negotiations with the TUC and the Nigeria Labour Congress ended without agreement yesterday. The main oil union, Pengassan, said it will shut down oil output only as “a last resort” to give more time for talks to end the strike. Gasoline prices more than doubled from 65 naira a liter since the subsidies were abolished on Jan. 1.
“We’ve only suspended the protests, but asked everyone to sit at home,” Esele said.
The strike, which entered its second week today, has slowed trading in stocks and the naira, closed ports and banks and sparked street protests. The cost of the labor action to sub- Saharan Africa’s second-biggest economy may be more than $1 billion a day, according to Gregory Kronsten, head of macroeconomic research at FBN Capital Ltd. in London.
“The banks remain closed owing to security concerens as labor is continuing with the strike,” James Eze, a spokesman for Mainstreet Bank Ltd., said today by phone.
The strike began on Jan. 9 after the government ended subsidies, which it said cost 1.2 trillion naira ($7.4 billion) last year, and pledged to spend the savings on power plants and roads. At the same time Jonathan is facing a surge in religious violence in parts of the north where he has declared a state of emergency and says Islamic militants pose a worse threat to the country than the 1967-70 civil war.
Violence in North
At least 85 people have been killed in bomb and gun attacks since Christmas Day on churches in Abuja and in the north that the government blames on Boko Haram, a militant Islamic group inspired by Afghanistan’s Taliban movement. The northeastern state of Adamawa on Jan. 14 declared a 24-hour curfew in four of its districts to curb the violence.
“Hopefully this will reduce political tension in Nigeria,” Charles Robertson, chief economist at Renaissance Capital in London, wrote today in e-mail. “While it can be argued the government has had to scale back its reform ambitions, some compromise is not a big surprise, and the government is now promising to push ahead on the Petroleum Industry Bill.”
Jonathan’s price cut fell short of the unions’ demand for a full reversal, the NLC and the TUC said in a statement yesterday, before the announcement.
The Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said yesterday that while oil output and exports remain unaffected by the strike, it’s ready “to execute immediately the systematic shutdown of oil production should the negotiation with the government break down.”
The capping of gasoline prices in Nigeria, where two-thirds of the population of about 164 million live on less than $1.25 a day, led to a shortage of investment in refineries that forced the nation to import about 70 percent of its fuel.
In opposing Jonathan’s policy, union leaders and protest groups focused their criticisms on government waste and corruption associated with fuel imports and distribution.
“The government’s credibility is seriously dented,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co., said in an interview. “They’ll have to earn it back.”
Oil Minister Diezani Alison-Madueke said she has set up bodies to eradicate corruption and examine management in state oil companies including the Nigerian National Petroleum Corp. She will meet with the Senate this week to try and speed up the passage of the petroleum bill needed to reform the industry.
“All hands are on deck to ensure full probity and accountability in the oil industry,” she said in a statement. “Having spent the last few months painstakingly reviewing its operations and designing a vision for the future, it is now time to deliver.”
Nigeria pumped about 2.2 million barrels of oil a day last month, according to data compiled by Bloomberg, accounting for almost all of its export income. At least 90 percent of Nigeria’s crude is produced by Royal Dutch Shell Plc, based in The Hague; Exxon Mobil Corp.; San Ramon, California-based Chevron Corp.; Total SA and Eni SpA in joint ventures with the state-owned NNPC.
The naira gained 0.1 percent to 161.8 to the dollar as of 10:06 a.m. in Lagos, according to data compiled by Bloomberg. Trading on the country’s bourse last week was about a third of the 1.05 billion shares that changed hands the week earlier, the Nigerian Stock Exchange said in an e-mailed report. The Nigerian Stock Exchange All-Share Index fell 0.2 percent on Jan. 13 to 20,840.97.
Crude for February delivery gained rose as much as 78 cents to $99.48 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.35 at 9:35 a.m. in London. Cocoa prices in New York have advanced 4.6 percent in New York since the strike started on concern shipment from Nigeria, the world’s fourth-biggest producer of the beans, will be disrupted.
--With assistance from Elisha Bala-Gbogbo in Abuja and Emele Onu in Lagos. Editors: Karl Maier, Antony Sguazzin
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