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Nigerian Labor Unions Suspend Strike on Fuel Subsidies

Nigeria Labor Congress President Abdulwaheed Omar, center, speaks to journalists after meeting with the Nigerian president at the state house in Abuja. Photographer: Emmanuel Wole/AFP/Getty Images
Nigeria Labor Congress President Abdulwaheed Omar, center, speaks to journalists after meeting with the Nigerian president at the state house in Abuja. Photographer: Emmanuel Wole/AFP/Getty Images

Jan. 16 (Bloomberg) -- Nigerian labor unions suspended strikes and protests in Africa’s top crude producer after President Goodluck Jonathan limited gasoline-price increases.

The Nigeria Labour Congress and the Trade Union Congress “decided that in order to save lives and in the interest of national survival, these mass actions be suspended,” the two labor federations said in a statement today in Abuja, the capital. They also urged the government to release protesters detained during demonstrations over the past week.

Jonathan, 54, earlier announced a limit on the increase in gasoline prices to 97 naira ($0.60) a liter. The strike began Jan. 9 after the government ended subsidies, which it said cost 1.2 trillion naira last year, and vowed to spend the savings on power plants and roads. Gasoline prices more than doubled from 65 naira a liter since the subsidies were abolished on Jan. 1.

Jonathan “has bought some time and he has a short time to improve the credibility of the government,” Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Co., said by phone. “The unions have lost, the government has lost and the people have lost.”

Nigeria is also facing a surge in religious violence in parts of the north where Jonathan has declared a state of emergency and says Islamic militants pose a worse threat to the country than the 1967-70 civil war.

Northern Violence

At least 85 people have been killed in bomb and gun attacks since Christmas Day on churches in Abuja and in the north that the government blames on Boko Haram, a militant Islamic group whose name in the Hausa language means “western education is a sin.” The northeastern state of Adamawa on Jan. 14 declared a 24-hour curfew in four of its districts to curb the violence.

Central Bank of Nigeria Governor Lamido Sanusi praised Jonathan’s handling of the negotiations to end the strike.

“I think it showed political maturity and a willingness to move forward from where we were, even if he does not reach his target in one go,” he said in an e-mailed response to questions. “It also showed that he had listened because it contained acknowledgment of many of the issues raised by civil society.”

The strike slowed trading in stocks and the naira, closed ports and banks and sparked street protests. The cost of the labor action to sub-Saharan Africa’s second-biggest economy may be more than $1 billion a day, according to Gregory Kronsten, head of macroeconomic research at FBN Capital Ltd. in London.

Square One

“At some point -- April appears to be the current time-scale -- the government will phase out the subsidy again,” Ashley Elliot, a Nigeria analyst at Control Risks in London, said in an e-mailed response to questions. “Unless more is done to lay the groundwork, we could be back to square one.”

Labor leaders will continue discussions on the subsidy with an 11-member committee led by a former chief justice of Nigeria, Alfa Begore, NLC President Abdulwaheed Omar said.

“In removing only half of the subsidy, this implies only half of the subsidy funds will now redeployed, which is still positive as it implies more spending on infrastructure and the like,” Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, said in an e-mailed reply to questions today. “It’s not like the government is cutting funds that had already been redeployed.”

The government’s handling of the demonstrations drew criticism today from the governor of Lagos state, Babatunde Fashola, who said soldiers shouldn’t have been deployed against peaceful protesters.

Military Presence

“Why should we feel irritated when they sing and dance in protest against what we have done?” Fashola said today in a broadcast. “For me this is not a matter for the military. The sooner we rethink and rescind this decision the better and stronger our democracy will be.”

Oil Minister Diezani Alison-Madueke said she has set up bodies to eradicate corruption and examine management in state oil companies including the Nigerian National Petroleum Corp. She will meet with the Senate this week to try and speed up the passage of a proposed Petroleum Industry Bill needed to reform the industry.

“Tensions on the narrow issue of fuel subsidies have unleashed broader popular anger over corruption and inequality,” Elliot said.

Crude Production

Nigeria pumped about 2.2 million barrels of oil a day last month, according to data compiled by Bloomberg, accounting for almost all of its export income. At least 90 percent of Nigeria’s crude is produced by Royal Dutch Shell Plc, 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 NNPC.

Crude for February delivery rose 74 cents to $99.44 a barrel in electronic trading on the New York Mercantile Exchange at 15:56 p.m. in London.

The naira was little changed at 161.94 per dollar as of 4:33 p.m. in Lagos, according to data compiled by Bloomberg. The naira interbank market is still effectively closed, Samir Gadio, a London-based emerging-market strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today.

The Nigerian Stock Exchange All-Share Index declined 0.1 percent to 20,824.82 at the close in Lagos, according to an e-mailed statement from the bourse. Trading last week was about a third of the 1.05 billion shares that changed hands the week earlier, the exchange said.

To contact the reporters on this story: Elisha Bala-Gbogbo in Abuja at; Chris Kay in Abuja at

To contact the editor responsible for this story: Antony Sguazzin at

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