Nigerian workers began a national strike after fuel costs more than doubled, threatening to shut ports and disrupt output from Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX) in Africa’s largest crude producer.
Banks, businesses, schools and most offices were closed and streets deserted except for protesters today in Lagos, the West African nation’s economic center, and Abuja, the capital. At least 14 people were injured in the northern city of Kano, seven of them by gunshots, after protesters clashed with police, Musa Abdullahi, chairman of the Red Cross in the state, said.
The Nigeria Labour Congress and the Trade Union Congress, the country’s biggest labor union federations, called the strike to force President Goodluck Jonathan to reverse a decision to scrap fuel subsidies. The industrial action started a day after Jonathan said Islamic militants responsible for attacks in the north infiltrated his government and threatened Nigeria with a situation worse than the 1967-70 civil war.
“The objective is that the government must reverse the fuel price increases before we end the strike,” Owei Lakemfa, secretary-general of the Nigeria Labour Congress, said today by phone from Abuja.
Gasoline prices in Nigeria, where two-thirds of the population of about 164 million live on less than $1.25 a day, surged after Jonathan abolished 1.2 trillion naira ($7.4 billion) of subsidies on Jan. 1. The price had been capped at 65 naira a liter, undermining investment in refineries that forced the nation to import about 70 percent of its fuel.
So far the strike hasn’t affected the oil exports of Shell, which has the biggest operations in Nigeria, company spokesman Tony Okonedo said today by phone from Lagos. Nigel Cookey-Gam, a spokesman for Exxon Mobil (XOM) Corp., which has the second-largest oil operations in Nigeria, didn’t answer calls on his mobile phone seeking comment.
Nigeria produced an average 2.2 million barrels of crude a day in December, according to data compiled by Bloomberg, and is the fifth-largest provider of oil imports to the U.S. At least 90 percent is pumped by Shell, based in The Hague, Exxon Mobil, San Ramon, California-based Chevron, Total SA (FP) and Eni SpA (ENI) in joint ventures with state-owned Nigerian National Petroleum Corp.
The two main oil unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria and the National Union of Petroleum and Natural Gas Workers of Nigeria, have “fully joined the strike,” and will “gradually shut down oil production,” Babatunde Oke, a spokesman for the union known as Pengassan, said by phone from Lagos.
Crude for February delivery trade at $100.93 at 11:23 a.m. London time in electronic trading on the New York Mercantile Exchange after rising to $102.15 earlier today. Brent oil for February settlement was at $112.71 a barrel, down 35 cents, on the London-based ICE Futures Europe exchange.
Thousands of protesters led by union leaders marched from the Berger bus-stop in the south of the Abuja towards the city center while armed riot police watched. In Lagos, marchers headed for the governor’s office in the north of the city.
In northeastern Borno state, whose capital, Maiduguri, is a stronghold of the Boko Haram militants and is under emergency rule, union leaders have asked workers to stay at home and “have decided not to embark on street protests,” Titus Ali Abana, the state NLC leader, told reporters.
Jonathan, in a speech at a church service yesterday in Abuja marking Armed Forces Remembrance Day, said Boko Haram, which means “western education is a sin,” confronts Nigeria with “a more complicated” situation than the civil war.
At least 71 people have died in bomb and gun attacks since Christmas Day on churches in Abuja and four northern cities that the authorities blame on Boko Haram, which draws inspiration from Afghanistan’s Taliban movement.
“During the civil war, we knew and we could even predict where the enemy was coming from,” Jonathan said.
Trading in Nigeria’s currency ground to a halt as the strike started, said Mohammed Abdullahi, a spokesman for the Abuja-based Central Bank of Nigeria. The naira was less than 0.1 percent weaker at 162.05 per dollar as of 12:54 p.m. in Lagos, according to data compiled by Bloomberg.
While the Nigerian Stock Exchange will try to maintain normal trading, it “may be significantly lessened and service disruptions may occur,” the bourse said today in an e-mailed statement.
“The stock market is trading, although volume is low,” David Adonri, a trader and chief executive officer of Lambeth Trust and Investment Ltd., a brokerage, said by phone from Lagos.
Inflation (NGCPIYOY), which was unchanged at 10.5 percent in November, will probably accelerate to the “mid-teens” in 2012, Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, wrote in an e-mailed note on Jan. 6. Nigeria’s central bank has raised its benchmark interest rate by 6 percentage points to a record 12 percent since September 2010.
“The impact of the petrol price hikes will go beyond simply pushing up transport costs,” Mhango said. While the government will probably stick to its plan, it may “still bow to popular pressure and phase out rather than simply scrap the subsidy.”
Jonathan announced a plan yesterday to provide 15 billion naira in zero-interest loans to help transportation companies acquire new buses and bring down transport costs. “Whatever pains we feel now will be transient, they will be very temporary,” he said.
Nigeria’s House of Representatives passed a motion yesterday urging the government to return fuel subsidies and to allow more time for consultation on the issue.
The U.S. embassy said on its website that citizens in Nigeria should stock up on food, water and fuel for at least three days in case the nationwide strike shuts shops. Air travel may also be disrupted, it said.
Nigerian lenders, including Diamond Bank Plc (DIAMONDB) and Standard Chartered Plc (STAN), will run limited branch services from today, according to officials at the companies. Members of the Lagos- based Manufacturers Association of Nigeria, such as Nampak Nigeria Plc (NAMPAK) and Flour Mills of Nigeria Plc (FLOURMIL), will likely be affected by the strike, the group’s president, Kola Jamodu, said in a phone interview.
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