Nigerian Labor Unions Suspend Strike on Fuel Subsidies
January 17, 2012, 4:40 AM ESTBy Elisha Bala-Gbogbo and Chris Kay
(Updates with comments from analyst in ninth paragraph, Lagos state governor in 10th.)
Jan. 16 (Bloomberg) -- Nigerian labor unions suspended strikes and protests in Africa’s top crude producer after President Goodluck Jonathan limited gasoline-price increases.
The Nigeria Labour Congress and the Trade Union Congress “decided that in order to save lives and in the interest of national survival, these mass actions be suspended,” the two labor federations said in a statement today in Abuja, the capital. They also urged the government to release protesters detained during demonstrations over the past week.
Jonathan, 54, earlier announced a limit on the increase in gasoline prices to 97 naira ($0.60) a liter. The strike began Jan. 9 after the government ended subsidies, which it said cost 1.2 trillion naira last year, and vowed to spend the savings on power plants and roads. Gasoline prices more than doubled from 65 naira a liter since the subsidies were abolished on Jan. 1.
Jonathan “has bought some time and he has a short time to improve the credibility of the government,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co., said by phone. “The unions have lost, the government has lost and the people have lost.”
Jonathan, who came into office in May, is also 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.
Northern Violence
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 whose name in the Hausa language means “western education is a sin.” The northeastern state of Adamawa on Jan. 14 declared a 24-hour curfew in four of its districts to curb the violence.
The strike 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.
Labor leaders will continue discussions on the subsidy with an 11-member committed by a former chief justice of Nigeria, Alfa Begore, NLC President Abdulwaheed Omar said.
Funds Redeployed
“In removing only half of the subsidy, this implies only half of the subsidy funds will now redeployed, which is still positive as it implies more spending on infrastructure and the like,” Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, said in an e-mailed reply to questions today. “It’s not like the government is cutting funds that had already been redeployed.”
The government’s handling of the demonstrations drew criticism today from the governor of Lagos state, Babatunde Fashola, who said soldiers shouldn’t have been deployed against peaceful protesters.
“Why should we feel irritated when they sing and dance in protest against what we have done?” Fashola said today in a broadcast. “For me this is not a matter for the military. The sooner we rethink and rescind this decision the better and stronger our democracy will be.”
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.
Corruption, Waste
“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.
Crude for February delivery rose 54 cents to $99.24 a barrel in electronic trading on the New York Mercantile Exchange at 13:44 p.m. in London.
The naira was little changed at 161.94 per dollar as of 2:07 p.m. in Lagos, according to data compiled by Bloomberg. The naira interbank market is still effectively closed, Samir Gadio, a London-based emerging-market strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today.
The Nigerian Stock Exchange All-Share Index fell 0.3 percent to 20,780.56 in Lagos. 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 exchange said in an e-mailed report.
--Editors: Karl Maier, Antony Sguazzin
To contact the reporters on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net; Chris Kay in Abuja at ckay5@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net
