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2003-10-09 17:43:00
Consulate Lagos
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Tags:   ELAB  EPET  NI 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
						C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 002090 



E.O. 12958: DECL: 10/09/2013

REF: REF: (A) LAGOS 02043 (B) ABUJA 01700 (C) LAGOS

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

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

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.