US embassy cable - 03LAGOS2090

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 002090 
 
SIPDIS 
 
 
LONDON AND PARIS FOR AFRICA WATCHERS 
 
 
E.O. 12958: DECL: 10/09/2013 
TAGS: ELAB, EPET, NI 
SUBJECT: STRIKE SUSPENDED:  LABOR AND OIL COMPANY VIEWS 
 
REF: REF: (A) LAGOS 02043 (B) ABUJA 01700 (C) LAGOS 
     02069 
 
 
Classified By: POL/ECON:FDay for reasons 1.5 (b) and (d) 
 
 
1. (U) Nigeria Labour Congress (NLC) President Adams 
Oshiomhole announced October 8 at approximately 2300 that 
labor had suspended its planned October 9 strike after the 
NLC, governors, National Assembly legislators, and oil 
marketers reached an agreement.  A hastily organized group, 
known as the Stakeholders Committee on Petroleum, decided 
temporarily to sell fuel at the pre-October 1 price of 34 
naira per liter while they deliberate a long-term strategy to 
deregulate the downstream sector.  The governors said they 
would monitor gas stations in their respective states to 
ensure prices remain at 34 naira until the committee reaches 
an agreement on deregulation.  John Odah, NLC General 
Secretary, told LabOff this morning that an All Stakeholders 
 
SIPDIS 
Summit will be held sometime this month to address supply, 
distribution and pricing of petroleum products. 
 
 
2.  (SBU)  According to the VP of a major downstream company 
who was at the meeting in Abuja the night of October 8, 
however, the labor version (above) is incomplete.  Diesel and 
kerosene, he said, are deregulated effective immediately. 
The NNPC and private marketers will keep gasoline in the 
pipeline; some belated third quarter deliveries are expected 
to straggle in during the coming weeks, and marketers will 
likely begin to import shortly after the next stakeholders' 
meeting next Thursday, October 16.  Gasoline at the pump will 
stay at 34 naira while NNPC stocks last (this is of course 
somewhat of a fiction, as prices outside a few big cities 
have always been higher).  NNPC contracts for Q4 delivery and 
forward months will begin contracting sharply while that of 
the commercial firms will expand correspondingly.  When the 
first private marketers' deliveries reach Apapa Port in Lagos 
(probably in late October), the pump price at all petrol 
stations is to correspond to market costs. 
 
 
3.   (C)  Two oil company executives who attended the meeting 
do not expect the Stakeholders' Committee to have any 
significant impact; for one thing, it is too unwieldy.  All 
36 governors are on it, and they all need to speak.  Next 
Thursday's meeting will be little more than a "photo op", we 
are told, and the executives believe the national senators 
assigned to the committee will stop attending meetings 
thereafter.  The committee's primary purpose is to provide 
cover for a face-saving arrangement for the unions, and that 
has already been accomplished. 
 
 
The President Strikes Back 
-------------------------- 
 
 
4.  (U) President Obasanjo addressed the nation two hours 
before the agreement was reached to argue strongly for the 
benefits of deregulation for the Nigerian consumer and 
economy and to launch a vicious attack on the NLC.  Failure 
to deregulate, he said, is costing everyone time and money, 
and it is unwise to invest more money in the rehabilitation 
of the refineries at Kaduna and Port Harcourt before they are 
privatized.  18 firms presently hold licenses to build 
refineries, he said, but none will take the risk of entering 
the industry due to the price controls that have hampered the 
downstream sector.  He said fuel marketers have been assured 
that the downstream infrastructure (e.g. at Apapa port in 
Lagos) will be improved to remove bottlenecks so Nigeria can 
get as much fuel as it needs.   The NLC knows well the 
benefits of deregulation, Obasanjo went on to say, and has 
endorsed the concept.  The President then launched into an 
extended, scathing attack on the NLC.  He claimed that it has 
become an opposition movement instead of a labor 
organization; contrary to the legislation establishing it the 
NLC wants to attain power through non-democratic means, and 
it is trying to become a parallel government.  Obasanjo also 
accused the NLC of providing cash to hoodlums, threating the 
police and unions such as the air traffic controllers who do 
not want to strike, and is acting out of "unpatriotic and 
sinister motives."  Obasanjo called the planned strike 
"illegal" as 15 days prior notice had not been given (note: 
we are unfamiliar with such a requirement).  He referred 
repeatedly to the 8th All Africa Games underway in Abuja, 
saying Nigerians should not shame themselves as hosts in 
front of their brother Africans.  He closed his extraordinary 
attack with a warning against any attempts to obstruct 
traffic or force the closure of shops or banks.  He then 
appealed for calm, adding "this is an appeal, but also a 
warning." 
 
 
5.  (C) Comment:  This agreement averts the immediate threat 
of a nationwide strike, and gives all sides a win.  For the 
first time, the unions, the oil companies and the government 
are all publicly in agreement in favor of deregulation of 
petroleum products. Labor and civil society are still fuming 
over Obasanjo's autocratic handling of the issue, but their 
leaders are happy to have won a seat at the table.  They 
will, in other words, give Obasanjo what he wanted (and what 
many of them wanted also), but will appear on television 
while doing so.  It is interesting to speculate on the role 
Obasanjo's attack on the NLC played in obtaining this 
agreement.  Union leaders speaking to outsiders dismiss the 
impact of his statement, but it was a naked threat.  Large 
sections of his address can only be understood as the text of 
an implicit threat that he could ban the NLC; he laid out an 
entire justification for doing so. 
 
 
HINSON-JONES