Nigerian union orders oil shutdown from Sunday

LAGOS/ABUJA Thu Jan 12, 2012 1:50pm EST

1 of 2. A man is arrested by the police for looting on the fourth day of a nationwide strike against the removal of the petrol subsidy in Lagos January 12, 2012. Tens of thousands of Nigerians have been protesting up and down Africa's most populous nation for four straight days in protest against the axing of the petrol subsidy, which more than doubled the price to around 150 naira ($0.93) per litre.

Credit: Reuters/Akintunde Akinleye

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LAGOS/ABUJA (Reuters) - Nigeria's main oil union said on Thursday it would shut down output from Africa's biggest oil producer on Sunday if the government did not reverse its decision to remove popular fuel subsidies.

Tens of thousands of Nigerians have been protesting up and down Africa's most populous nation for four straight days in response to the axing of the petrol subsidy, which more than doubled the price to around 150 naira ($0.93) per litre.

"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 January 15 (2300 GMT on Saturday January 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.

President Goodluck Jonathan entered a meeting with labour unions in the presidential villa on Thursday, in an effort to reach an agreement to end the strike.

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.

"If there is any disruption to oil production it would be a serious escalation and the government would be likely to use legal or enforcement means to stop it," said Kayode Akindele, partner at Lagos-based investment firm 46 Parallels.

Container shipping group Maersk Line said it was unable to bring its vessels carrying consumer goods and foodstuffs into Nigeria's ports as a fourth day of nationwide strikes brought terminals to a standstill.

PROTESTS

Protests were ongoing in cities everywhere from the commercial centre Lagos in the south to the remote and restive city of Maiduguri in the far northeast.

In Lagos, tens of thousands gathered in Gani Fawehinmi Freedom Park, where women selling drinks and Afrobeat music pumping out of loud speakers gave the protest a carnival atmosphere. Many chanted anti-government slogans.

A group of demonstrators beat drums and slapped an effigy of Jonathan across the face with leafy branches.

"Our leaders have betrayed us too many times and this is the last time. They only care about themselves, not the common people," said Olu Shittu, 30, a student, expressing a widely held view that Nigeria's elite are too busy lining their own pockets to be moved by the plight of the poor.

"We're staying here until they put the subsidy back."

President Jonathan has shown no sign of backing down on his government's decision to scrap a subsidy economists say was wasteful and corrupt, but that could change in the current meeting, as pressure mounts on him to yield to public opinion.

"I am positive something concrete will come from discussions ... they will not be held in vain," Reuben Abati, presidential spokesman, told Reuters at the presidential villa in Abuja earlier in the day.

Publicly unions have said they will only stop strikes if the government returns petrol prices to the pre-subsidy removal rate of 65 naira and the government has said it will not reverse its decision to scrap subsidies from January 1.

The national assembly has already urged the government and unions to back down but without success.

NEGOTIATIONS

Banks, shops, airports and schools remained closed but small market sellers and roadside hawkers carried on trading.

In the remote northeastern city of Maiduguri, which is also plagued by an Islamist insurgency and where the government on Thursday imposed a curfew from 6 p.m. (1700 GMT) to 6 a.m.

The strikes are costing Africa's second largest economy around 100 billion naira ($617 million) a day, Central Bank governor Lamido Sanusi told Reuters on Thursday.

He expected inflation to rise to around 14-15 percent by the middle of this year, up from 10.5 percent now as the impact of subsidy removal is felt on prices.

Nigeria's main union has remained defiant, insisting it would continue its strike until subsidies are reinstated.

"We won't surrender until the pump price of petrol is reverted to 65 naira," Owei Lakemfa, general secretary of the National Labour Congress, told Reuters by phone in Abuja.

Economists say the subsidy fuelled corruption and keeping it in place would have forced 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 does not refine its own fuel.

Jonathan is now facing two major security headaches - opposition to the fuel price spike and almost daily attacks by an Islamist group in the north.

The leader of Boko Haram, which wants Islamic sharia law more widely applied across Nigeria, appeared in an online video on Tuesday saying Jonathan did not have the capability to stop the group's insurgency.

(Additional reporting by Joe Brock and Camillus Eboh in Abuja, Ibrahim Mshelizza in Maiduguri, Mike Oboh in Kano; Writing by Joe Brock; Editing by Sophie Hares)

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Comments (1)
Cutting fuel subsidies that most of the country’s people need helps the growing insurgency. Boko Haram will gain numerous recruits. The closure of the ports, airports, banks, and shops will shut down the economy. Closure of schools offers new, young insurgent recruits who can fight for years. The US and EU will suffer the most from the oil disruptions and rising prices. The West is under attack on numerous fronts.

Jan 12, 2012 2:00pm EST  --  Report as abuse
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