NLC GASOLINE STRIKE ULTIMATIM -- GON OVER A BARREL?

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