Nigerian government to meet unions

2016-05-16 22:42

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Abuja - Nigeria's government was on Monday seeking to reach an agreement with union leaders to prevent a national strike over petrol price rises, as economic pressures mount and concerns grow about falling oil production.

Labour ministry officials were to meet with representatives of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) to discuss the 67% hike imposed last week.

Both unions have called for an indefinite strike from Wednesday unless prices are slashed from $0.73 to $0.43 per litre.

Government offices, airports, sea ports and businesses including banks, shops and markets, would be shut if talks failed, the unions warned, calling on people to stockpile food.

Any industrial action would exacerbate pressures in Africa's largest economy caused by the global slump in crude prices, which has drastically cut government revenue from oil exports.

On Monday, Nigeria's National Bureau of Statistics said the inflation rate had risen for the sixth consecutive month to 13.7% in April, up from 12.8% in March.

Nigeria depends on oil sales for 70% of government revenue and the global plunge in oil prices has weakened the naira currency and made foreign exchange scarce.

To make matters worse, junior oil minister Emmanuel Kachikwu said domestic production had fallen from 2.2 million barrels per day because of renewed militant attacks on pipelines and facilities.

"We are basically producing about 1.4 million barrels [per day]," he told parliament in a presentation to explain the petrol price rises.

Subsidy system

Kachkiwu, who also heads Nigeria's state-run oil firm, last week announced the petrol price rise and deregulated the fuel import market to try to end shortages caused by the lack of forex.

Black market exchange rates are running at about 350 naira to the US dollar but the government has refused to change the official rate of 197-199.

As a result, fuel importers have been unable to source forex at the official market rate to buy supplies, causing pumps to run dry and long queues at filling stations.

Wranglings over subsidy payments between importers and the government have previously led suppliers to withhold deliveries in a system widely criticised as open to abuse.

OPEC-member Nigeria depends on fuel imports because of a lack of domestic refining capacity.

The government has kept prices at the pump low and paid the difference to importers but with overall oil revenue squeezed it can no longer afford to subsidise at $0.43 per litre.

Because of the lack of fuel, motorists have been paying upwards of $0.73 per litre for months.

Kachikwu told parliament the price rise was "absolutely essential" to kick-start growth, improve investor confidence and even for Nigeria "to survive as a nation".

Economic 'tailspin'

A previous attempt to end fuel subsidies in January 2012 saw petrol prices more than double but the government was forced to partially reinstate them after widespread protests.

But there were indications the unions may have misjudged the public mood this time around.

"[The NLC] should realise that Nigeria is already in a tailspin and cannot afford any strike that will worsen the nation's economic woes at this time," said Lagos stockbroker Sola Oni.

"Besides, the new price [of petrol] will end the fraudulent subsidy regime that has only enriched a few Nigerians," added Oni, from Sofunix Investments and Communications.

Public affairs commentator Quincy Durodola also questioned the timing of the union threat.

"NLC was quiet when their members in IPMAN [Independent Petroleum Marketers Association of Nigeria] collected subsidies and still sold above the subsidised rates," he said.

"It never saw anything wrong with that."

The unions should support government efforts to make the oil sector more transparent and efficient, rather than create "unnecessary" labour unrest, he added.

Read more on:    nigeria  |  west africa

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