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Nigeria unions suspend strike after fuel price cut
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1 of 2. A woman waits for customer at a local food market after the suspension of a nationwide strike by labour unions, in Nigeria's commercial capital Lagos January 16, 2012.
Credit: Reuters/Akintunde Akinleye
ABUJA |
ABUJA (Reuters) - Nigerian trade unions called off strikes and protests on Monday, ending a major confrontation over fuel prices after President Goodluck Jonathan said he would cut them by one third.
Jonathan reinstated part of a subsidy on petrol, the scrapping of which was one of his key policies, and the u-turn may damage the credibility of a government already accused of being indecisive.
The compromise still slashes the cost of the benefit to the government and leaves the way open to talks on phasing it out again later, but doing so may be much harder if Nigerians know they can reverse the unpopular policy by taking to the streets.
The protest had added to the administration's headaches at a time when it was already under fire for failing to take adequate steps to quell an increasingly violent Islamist insurgency in the north by militant group Boko Haram.
But the deal did avert a threat by oil workers to shut down production in Africa's biggest oil producer, a threat that had supported world oil prices.
However, the main umbrella union in Nigeria's second biggest city of Kano, in the north, said protests and strikes would continue there. Sporadic violence has been worst in Kano, where anti-government sentiment is currently riding highest.
Three people were killed and many wounded in clashes there last week.
Jonathan said fixing the liter price at 97 naira ($0.60) was a short-term response to ease hardships.
"In the past eight days through strikes, mass rallies, shutdown, debates and street protests, Nigerians demonstrated clearly that they cannot be taken for granted and that sovereignty belongs to them," Abdulwaheed Omar, president of the Nigeria Labour Congress (NLC), told a news conference.
"Labour and its allies formally announce the suspension of strikes, mass rallies and protests across the country."
When a price cap of 65 naira ended on January 1, pump prices more than doubled to 150 naira. The new cap of 97 naira still represents a 50 percent price increase since January 1.
The strikes paralyzed Africa's second-largest economy last week and the oil workers union had threatened to shut down its 2 million barrel a day production.
Africa's most populous nation holds the world's seventh largest gas reserves but its infrastructure provides enough power to run only one medium-sized European city, meaning most of the country's 160 million people live without electricity.
"The government will continue to pursue full deregulation of the downstream petroleum sector. However, given the hardships being suffered by Nigerians, and after due consideration and consultations ... the government has approved the reduction of the pump price of petrol," Jonathan had said in a national broadcast earlier in the day.
Kano NLC leader Yunusa Danguguwa said he would ignore the agreement by the union bosses to end the strike.
"We are saying no and we will continue to fight till the federal government listens to us ... we will assemble tomorrow to continue the struggle," he said, adding that it would not stop until the government reverted to a 65 naira a liter price.
PUBLIC ANGER
"Everybody has lost," said Bismarck Rewane of Lagos-based consultancy Financial Derivatives.
"The cost of administering the subsidy is higher than the subsidy and that is still there, so is the abuse and corruption that goes with the subsidy. And no one will invest in refineries to solve the long term issue while the pump price is fixed."
Rewane also said the credibility of both the government and the unions is damaged: the government because it had lost a chance to tackle a perception of it as "inefficient, corrupt and wasteful" by failing to scrap the subsidy, and had shown it could be made to back away from key reforms.
The unions have lost credibility because they are strongly suspected to have been paid off in talks, he said.
It remains unclear whether the government will be able to keep the lid on the public anger unleashed by the protests, rooted in years of frustration at corruption and incompetence.
Residents of Nigeria's biggest city, Lagos, reported soldiers in the streets in an apparent security move.
"He is ... not listening to the voice of the Nigerian people. We're not stupid and he shouldn't treat us as if we(are)," said IT consultant Mavila Sadiq.
A few hundred protesters chanting "solidarity for ever" tried to continue protesting in Ketu, on the outskirts of Lagos, in the morning, but armed riot police and soldiers blocked them.
"Ordinary people went out on the streets, they sacrificed and only got a portion of what they wanted," said Antony Goldman, head of PM consulting.
"There does seem to be an element of resignation about it, but it still leaves a kind of vacuum. The government will have to deliver ... (something) quickly."
Analysts suggest that something may have to be a clean-up of the oil ministry, whose minister Diezani Alison-Madueke said overnight she had asked the corruption watchdog to investigate alleged graft in the subsidy process.
INVESTIGATION INTO GRAFT
Economists said the subsidy is wasteful and corrupt. Protesters have countered that the government should work harder to tackle graft and waste before rescinding public benefits.
Jonathan gave approval on Sunday for an investigation into corruption in the oil sector. Alison-Madueke said she had written to the Economic and Financial Crimes Commission inviting the regulator to examine the subsidy procedure.
The state oil company NNPC and fuel regulators have come under fire for lacking transparency and mismanagement, including in a report compiled by international accounting firm KPMG. Alison-Madueke pledged to review such reports, though some analysts question the ministry's good faith in doing so.
"The KPMG report has been on your desk for over a year. So why now?" Kayode Akindele, a director of the Lagos investment firm 46 Parallels, asked of the oil minister.
"The president might have to sacrifice somebody, and it might have to be the petroleum minister. Nobody has said anything in support of her."
But some other analysts regarded her as untouchable.
Alison-Madueke said she would meet legislators in the next week to seek progress towards passing a wide-ranging Petroleum Industry Bill (PIB) that has been stuck in parliament for years, costing Nigeria billions of dollars in lost investment.
Analysts said the unions reckoned that Jonathan, having a made a large concession, was unlikely to back down further.
Several people were killed in clashes with police last week and 600 were treated for wounds, according to the Red Cross.
Analysts noted the protests were not nationwide and only affected some parts of the country, as most Nigerians outside the main urban centers had never had fuel at the official subsidized price anyway.
The southeast, where Nigeria's oil lies, was quiet.
(Additional reporting by Camillus Eboh in Abuja, James Jukwey, Tim Cocks and Njuwa Maina in Lagos; Writing by Tim Cocks; Editing by Tim Pearce)
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I can never agree enough with Stephen Ellis, a historian at the Africa Studies Center at Leiden University in the Netherlands, who sees Jonathan as a “wily politician who has already shown he has the skills to operate in Nigeria’s challenging politics, which he calls “a very rough business … like a poker game … or juggling chain saws.”’
Ellis Further noted that every one in the country including those pursuing their own agendas by using the book- haram all depend on the national income from oil. It most be noted though that the income used in sponsoring evil courses like boka-haram and the likes are not monies aimed the lawful way. These diabolic agendas are usually sponsored by monies gotten from the smuggling subsidized refined petroleum product through Nigerian borders to neighboring Countries where they are sold at prices cheaper than the official price but the smuggler makes huge profit.
There are many ways He would have employed to tackle the Boca- haram insurgences but he sees the withdrawer of oil subsidies as the most effective of them all for many reason (this is the one stone that will kill many birds). This will go along way to remove arms from the hands of the boca- haram fighters thus bringing insurgence to natural death. Secondly it will ensure federal revenue is made available and can be put into uses that benefit the nation and not just a few scared cows. It will also provide him with the resources to fulfill his campaign pledges to the nation. This singular action has also placed Nigeria at par with other nations of the world and has automatically increase her bargaining powers as well as her likability in the community of nations. With the removal of subsidies, Nigeria as a nation can now say “I make so much a day”.
This was not the case when the oil was been subsidized, as much of income went into oil subsidies which only benefited a few who had the connection to smuggle the oil. With the present situation of things, other nations will be more willing to help Nigeria where she falls –short. You cannot keep calling on people to help you revamp your economy, technology etc when you throw the little you have through the drain (by dangerous fiscal practices). Secondly if Nigeria has need of a better security outfit that will put beca haran insurgences at bay and the nation with the best security system is willing to help transfer the technology, but if Nigeria cannot even afford 20% of the cost of the project, how can this be accomplished? But where will she get that money if she daily throws many to smugglers by way of oil subsidies?
I understand the frustration of Nigerians with corruption in government. But if there most be a change, the change must have a starting point. Nigerians must understand that the issue of corruption in government did not start with the present administration. It is a worm that has eaten deep into the very fabric of the nations economy by succession of corrupt regimes. Thus it is not going to be easy to sweep out this level of corruption within this short space of time. We cannot go on this way for ever. Enough is enough. It is time to move forward. Nigerians must excise more patience and be willing to make the necessary sacrifice for this to work.
But again government is forced to cut down the price by almost 50%. But it’s still okay. It is not in any way an indication of weakness on the side of government or the labor union as some may want us to believe, Rather it is once again a demonstration that he is willing to listen, to work with the people and to come to a realistic compromise. Even though it would have been better to face out regulation at once, deregulation in phases is still better than nothing.
Those labor union chapters vowing to continue with strike until we return to square one, should know that such a decision is not in the interest of majority of Nigerians, who have never benefited from this subsidies but only a few who smuggle subsidized product across the borders. .
My advice is that federal government should immediately use monies saved from subsidies to began paying relief packages to workers and immediately adjust salaries to reflect the new situation. The military and the police should be first on the list then Health, Transportation, Education ministries and etc
Politicians on all levels should be sent home to advice their various constituencies and help them understand why it has become necessary for subsidies to go. And also to explain to them the programs government has in place to alleviate the suffering engendered by the removal subsidies. These will go along way to give people hope and calm.
Also security lapses in every nook and cranny of Nigeria should not be seen as the sole responsibility of the President or federal government. Agreed he is the Commander-in-Chief but what about the Minister of defense? What about the Inspector General police? The Head of Secrete Service? These are the security Majors of this nation. What are they doing about the state of security in the country? What about commissioners of police and Governors of the various States where insurgencies have become incessant? What have been their efforts? And what operation order have they put in place to ensure a more effect response in case of future attacks? These are questions you need to ask before you allow desperate politicians to take you on a ride of their selfish agenda. If there are security lapses in the nation these are the first people to be held accountable. Is the President to micro-manage every ministry in the nation? That is not possible. If that is the expectation, then there should be no need for heads of ministries.
Defense minister, Inspector Genaral ofpolice along with other Heads of the various Security Departments should spring into action and come up with lasting solutions and advice the President according. It is better to offer solutions or suggestions than to apportion blames.
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