Jan. 13 (Bloomberg) -- Nigeria’s general strike entered its fifth day, threatening oil exports from Africa’s top producer, after President Goodluck Jonathan and labor leaders failed to end a dispute over fuel subsidies.
Jonathan and union leaders will resume talks tomorrow after holding “fruitful” negotiations yesterday in Abuja, the capital, Abdulwaheed Omar, president of the Nigeria Labour Congress, told reporters. The strike has limited trading in stocks and the national currency as well as closed ports and banks and sparked street protests.
The unions are trying to force Jonathan to reverse his decision on Jan. 1 to scrap 1.2 trillion naira ($7.4 billion) in fuel subsidies that more than doubled gasoline prices. The oil union Pengassan said yesterday it would begin shutting down crude production on Jan. 15 if there was no deal with the government, while its counterpart Nupeng said it has withdrawn its workers from fields operated by companies such as Royal Dutch Shell Plc.
Jonathan, who won a four-year term in April, pledged to use savings to invest in power plants and roads in sub-Saharan Africa’s second-largest economy. At the same time he faces an increase 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.
More than 85 people have died in bomb and gun attacks since Christmas Day on churches in Abuja, and in the north that the authorities blame on Boko Haram.
Crude for February delivery rose 87 cents to $99.97 in electronic trading on the New York Mercantile Exchange at 6:48 a.m. in London.
Gasoline prices in Nigeria, where two-thirds of the population of about 164 million live on less than $1.25 a day, had been capped at 65 naira a liter (0.3 gallon), undermining investment in refineries that forced the West African nation to import about 70 percent of its fuel.
The cost of the strike to the economy may be more than $1 billion a day, Gregory Kronsten, head of macroeconomic research at FBN Capital Ltd. in London, wrote in an e-mailed note yesterday.
Nigeria’s benchmark stock index may extend its 21 percent drop over the past 12 months if the strike disrupts oil exports, investor Mark Mobius said.
“We could have some very substantial corrections as a result of these moves, particularly if the unions succeed in cutting off the exports of petroleum,” Mobius, who helps oversee about $40 billion as executive chairman of Franklin Templeton Investment’s Emerging Markets Group, said yesterday in a phone interview from Cancun, Mexico.
The value of trading yesterday on the Nigerian Stock Exchange was 350 million naira, according to figures e-mailed by the bourse. Normal trading is 2 billion naira a day, Samuel Onukwue, managing director of Mega Equnaira Ltd., a Lagos-based brokerage, said by phone.
Nigeria pumped about 2.2 million barrels of oil a day last month, according to data compiled by Bloomberg. At least 90 percent of Nigeria’s crude is pumped by Shell, 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 Nigerian National Petroleum Corp.
An attempt by the unions to shut down production “would not necessarily have an immediate or severe impact on operations due to the high level of automation in the process, the presence of non-unionized and foreign workers and tight security at oil installations,” IHS Global Insight Africa analyst Sebastian Boe said yesterday in an e-mailed statement.
Oil accounts for about 80 percent of state revenue and more than 95 percent of export income, according to the Finance Ministry.
Cocoa prices have gained 8.2 percent this week in London on concern the strike will stop shipments from the world’s fourth-biggest producer of the chocolate ingredient. The labor action has halted cocoa grading and transportation of the beans from farms, according to the Cocoa Association of Nigeria.
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