Nigeria subsidy talks 'fruitful', strikes continue

Thu Jan 12, 2012 6:12pm EST

Related Topics

* Unions, president to resume talks on Saturday

* Nationwide strikes, protests run into fifth day

* Oil workers threaten to cut output from Sunday

By Felix Onuah and Joe Brock

ABUJA, Jan 13 (Reuters) - One of Nigeria's main trade unions said talks with President Goodluck Jonathan over the government's removal of publicly popular fuel subsidies were 'fruitful' and ongoing, but strikes would continue until an agreement was reached.

Nigeria scrapped subsidies on petrol imports on Jan. 1, more than doubling the pump price to around 150 naira ($0.93)a litre, sparking bitter protests across the country.

Tens of thousands of Nigerians had been demonstrating in cities up and down Africa's most populous nation for four straight days as neither side was ready to concede an inch.

Unions said the pre-subsidy removal petrol price of 65 naira a litre must be reintroduced and the government said fuel subsidies were gone for good because they were corrupt and a dangerous drain on Africa's second-largest economy.

But Jonathan and unions met late on Thursday.

"We had fruitful discussions, both sides have agreed to shift ground. We will be meeting again on Saturday," said Abdulwaheed Omar, president of Nigeria Labour Congress, one of Nigeria's two biggest workers' unions.

"Unless and until we get a conclusive conclusion from the discussion then that means we will maintain status quo. For now the strike still continues," Omar said.

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 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.

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

OIL OUTPUT

Nigeria's main oil union said before the meeting it would shut down output from Africa's biggest oil producer on Sunday if the government did not meet the public's demands, piling pressure of Jonathan to begin negotiations.

"PENGASSAN shall be forced to go ahead and apply the bitter option of ordering the systematic shutting down of oil and gas production with effect from ... 0000 hours of Sunday Jan. 15 (2300 GMT on Saturday Jan. 14), if the federal government of Nigeria fails to yield to the popular agitation of Nigerians on her unacceptable approach to fuel subsidy removal," the oil union said in a statement.

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.

Worries over Nigerian oil supplies have pushed up global oil prices.

Nigeria produces more than 2 million barrels of crude oil per day and is a key supplier to United States, Europe and Asia. Crude exports provide Africa's second-largest economy with over 90 percent of foreign exchange revenues.

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

Despite holding the world's seventh-largest gas reserves and producing over 2 million bpd of crude, decades of graft and mismanagement mean Nigeria has to import almost all of its fuel needs. ($1 = 162.0500 Nigerian naira) (Writing by Joe Brock; Editing by Giles Elgood)

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