US embassy cable - 04ABUJA1666

UNCLAS SECTION 01 OF 02 ABUJA 001666 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, ELAB, EPET, PINS, NI, OIL 
SUBJECT:  NLC GASOLINE STRIKE ULTIMATIM -- GON OVER A BARREL? 
 
REF: A. LAGOS 1969 
     B. LAGOS 1978 
     C. ABUJA 1656 and 1486 
     D. ABUJA 1597 
 
SENSITIVE BUT UNCLASSIFIED, NOT FOR POSTING ON THE INTRANET OR 
INTERNET. 
 
1. (SBU) Summary: The Nigeria Labor Congress (NLC) issued an 
ultimatum September 27 that GON had two weeks to roll back 
gasoline price increases, and if this were not done, the NLC 
would organize a nationwide "sit at home" work stoppage.  Retail 
gasoline prices have gone up over 20 percent since the GON tried 
again to stop its subsidy on imported gasoline September 24 (Ref 
A), a somewhat regular GON effort every few months for more than 
a year.  Each time, the NLC has pushed back (sometimes with help 
from opposition politicians) and the price increase was somewhat 
lowered, not reaching the original level each time but did not 
end the subsidy either.  The NLC may have the GON over a barrel 
this time, distracted by fighting in the Niger Delta oilfields 
(Refs B and C) and much of its economic team in Washington for 
meetings (Ref D), but that may instead provoke a harsher GON 
response.  End Summary. 
 
2. (U) After the GON raised gasoline prices on September 23, the 
NLC on September 27 gave the GON a two-week ultimatum to revert 
to the previous price of gasoline or face a sit-at-home protest. 
NLC President Oshiomhole announced that the NLC would ask workers 
to stay at home, and claimed that this did not contravene a 
September 21 Federal High Court ruling in Abuja that the NLC had 
no constitutional right to go on strike to protest re-imposition 
of a gasoline tax.  The Judge had ruled that the tax was not a 
trade dispute over which NLC could call workers to strike, 
although she said the NLC and its affiliates could go on strike 
over issues relating to employer-employee relationships.  She 
said the tax issues "before the court did not relate to such." 
 
WHAT IS THE LEGAL COVER FOR THE NLC? 
 
3. (SBU) Benson Ukpa, a top official at the NLC Headquarters told 
us that the court ruling had handed over a blank check to 
President Obasanjo "to punish Nigerians with his deregulation 
agenda that has no human face."  He contended that the court 
ruling thus does not affect the proposed sit-at-home protest. 
According to him, Justice Ukeje delivered her judgment on the 
gasoline tax strike but did not bar the NLC from taking actions 
"that border on labor issues like the unilateral price increase 
by the Government."  Ukpa maintained that the recent price hike 
has "seriously affected wages and purchasing power of the 
Nigerian workers." 
 
4. (SBU) Ukpa argued that if the Government had revised the wages 
of the workers while simultaneously raising the prices of 
petroleum products, there would have been no reaction from the 
labor unions.  When asked if the GON might file a contempt charge 
on the labor leaders, Ukpa thundered: "the same court was aware 
of how the Nigerian Government disobeyed many court rulings in 
the country and the same Government was not charged for 
contempt."  He said the GON continued to collect the gasoline tax 
after the NLC and Government were told by the court in February 
to stop its re-imposition. 
 
SUPPORT FOR THE NLC 
 
5. (SBU) Ukpa was confident that the sit-at-home strategy would 
work.  He confided that influential Nigerians, including 
religious and community leaders as well as the common people, 
have been expressing their support for the NLC declaration. 
"Eminent citizens like the Sultan of Sokoto have expressed 
support for our action."  (Note: the Sultan called for speedier 
benefits for the people from economic reform, which the 
newspapers interpreted as criticism of the price increase.) 
 
WITHDRAWAL OF SUBSIDY OR IMPOSITION OF FUEL TAX? 
 
6. (SBU) Two Ministry of Finance officials, including a top aide 
to the Minister, told us that the GON is "withdrawing its subsidy 
in line with the deregulation policy" and as such the price rise 
could not be called a fuel tax.  She said the GON had gradually 
withdrawn participation in the down stream sector by allowing the 
market to dictate the prices for petroleum products.  Nigerian 
National Petroleum Company (NNPC) head Funsho Kupolokun said much 
the same thing in public, adding that the increase in gasoline 
prices is needed to cover the cost of production and meet current 
trends in the international market. 
 
7.  (SBU) The latest increase in price nearly, and perhaps in the 
near future entirely, does away with the subsidy on gasoline. 
The GON figures a retail price based on costs plus some markup 
for each stage of the transaction from landing the imported 
gasoline through transmission to the gas station pump.  The 
retail price band the GON has set is 52-55 Naira per liter 
(roughly 1.56  to 1.65 usdols per gallon) in areas close to 
ports, with higher prices further afield.  This system is not, of 
course, a free market but it is far closer than ever before. 
 
COMMENT 
 
8. (SBU) Past the argument over gasoline prices and economics, 
the politics are fairly clear.  The NLC is taking on the 
government with public opinion on its side and the GON stretched 
thin.  The GON started the recent round of this fight by putting 
forward a labor bill in the National Assembly that would divide 
the NLC and take away some of its tools for political action. 
That present GON vulnerability could instead, perhaps, lead the 
government to concede even less to the NLC than it has in 
previous strikes or threatened strikes on the price issue.  Key 
labor officials might be picked up by security services to weaken 
any likely mass protest. 
CAMPBELL