US embassy cable - 03ABUJA1700

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 001700 
 
SIPDIS 
 
 
E.O. 12958: DECL: 10/01/2008 
TAGS: ELAB, EPET, ENRG, PGOV, PHUM, ASEC, CASC, NI 
SUBJECT: NIGERIA: FUEL PRICES HIKED BY FIAT 
 
REF: ABUJA 1195 
 
 
Classified by POL Russell J. Hanks.  Reasons:  1.5 (B&D). 
 
 
 
 
Fuel Price Raised Without Notice 
-------------------------------- 
 
 
1.  (C)  This morning Nigerians returned to work after 
yesterday's public holiday and learned from the media that 
the GON had deregulated the downstream oil sector.  According 
to a fuel marketer, the notification came in a letter on 
September 29 which said that the GON would not subsidize fuel 
after October 1, but urged marketers to keep the price below 
40 Naira per liter for the month of October.  Fuel prices at 
independent gas stations rose from the former fixed price of 
34 Naira to 39.9 Naira.   The GON and President Obasanjo made 
no public announcement of the deregulation, with Obasanjo 
eschewing the opportunity to address it in his Independence 
day address October 1.   As of late afternoon today, the GON 
has yet to make an announcement.  Petroleum products 
marketers can now charge any price for their products. 
Nonetheless, most stations prices in major cities remain 
below 40 Naira, the price Obasanjo wanted to fix the price 
during last July's nation-wide strike. 
 
 
 
 
Government Officials Caught Off Guard 
------------------------------------- 
 
 
2.  (C)  National Representative Faruk Aliyu, National 
Assembly Chairman for Media Affairs, told Poloff this morning 
that National Assembly members also learned of the fuel price 
hikes from the newspapers.  Dr. Oluwole Oluleye, the 
Executive Secretary of the Product Price Regulatory Agency 
(PPPRA), stated that for now prices at the few GON-owned 
stations will remain at 34 Naira a liter, while others are 
free to charge what they wish.  Oluleye also said that the 
PPPRA had approved the deregulation of the downstream sector. 
 COMMENT: The PPPRA, which was established by Obasanjo as the 
advisory board to determine fuel prices, will likely be 
disbanded in the next few months because it will serve no 
purpose in a deregulated market.  The PPPRA, contrary to 
Oluleye's statement to Econoff, has made no official 
announcement supporting deregulation of the downstream 
sector. END COMMENT. 
 
 
 
 
Labor to Call Nationwide Strike Early Next Week? 
--------------------------------------------- --- 
 
 
3.  (U)  The Nigeria Labour Congress (NLC) immediately 
denounced deregulation and promised nation-wide strikes next 
week. NLC President Oshiomhole also vowed to disrupt the All 
Africa Games, set to begin on October 4.  NLC officials 
confirmed that they are prepared for an extended strike, 
promising that NUPENG and PENGASSAN (white and blue collar 
petroleum) will join the strike and disrupt oil production. 
 
 
 
 
Fuel Survey 
----------- 
 
 
4.  (U)  According to Embassy's unofficial price survey, fuel 
prices in Abuja remained at 34 Naira (official GON rate) at 
the only NNPC (GON-owned) gas station in town, while prices 
varied from 39 to 39.9 Naira at independent stations.  At 
stations with fuel North of Abuja, prices range from 50 to 60 
Naira a liter, but fuel shortages remain chronic especially 
in Northeast and Northwest Nigeria.  In Lagos and the South, 
prices hovered at 39 Naira. 
 
 
 
 
Comment: Calm Before the Storm? 
------------------------------- 
 
 
5.  (C)  During the last nation-wide fuel strike in early 
July this year, organized labor flexed its muscles by 
bringing the country to a near halt for eight days and 
winning a concession from the GON.  As in July, the GON again 
neglected to consult with the unions and general public 
before yesterday's increase.  In spite of the NLC promising a 
nation-wide strike next week, the GON will not likely budge 
from downstream deregulation.  By not announcing the hike 
officially, it appears the GON is trying insulate itself from 
a harsh reaction.  If the political pressure is too great, 
Obasanjo and the GON can blame the hike on a 
"miscommunication" and avoid the full blame.  The nation 
remains calm today, but if the national mood at the end of 
the last strike is an indicator, a new strike could attract 
widespread support soon after the NLC announces its 
intentions. 
 
 
MEECE