Two-Day Strike by Truckers Results in Some Fuel Shortages;

UNCLAS AMMAN 003136

SENSITIVE
SIPDIS

DEPARTMENT FOR NEA/ELA, NEA/I, and EEB

E.O. 12958: N/A
TAGS: ECON ELTN EPET JO IZ
SUBJECT: Two-Day Strike by Truckers Results in Some Fuel Shortages;
Mixed Views on Bid Process to Ship Iraqi Oil

Ref: A) Amman 2381
B) Amman 2354
C) Amman 1789

Sensitive but unclassified; please protect accordingly.
Not for internet distribution or use outside the USG.


1. (SBU) Summary: Sixty-five Jordanian oil transportation companies
held a two-day strike on November 13 and 14 in protest of what they
consider to be low transportation fees paid by the Jordan Petroleum
Refinery Company (JRPC) and an alleged unfair bidding process for
the transport of oil from Iraq to Jordan's domestic refinery. Abdul
Kareem Dirabani, President of the Union of Transportation Trucks
Owners (UTTO) representing the companies, said JRPC's administration
had refused to negotiate on fees, but, in his view, allegations of
corruption involving the bid for transporting Iraqi oil were
unfounded. JRPC reported it did not consider the strike to be a
significant event. The strike, which ended when JRPC's CEO met with
UTTO and reached an undisclosed deal, initially resulted in isolated
shortages of fuel supplies in Amman and the southern cities of Kerak
and Tafilah. Fuel shortages, however, persist, which most observers
attribute to gas station owners who refused to sell existing fuel
stocks following the November 15 decision to lower consumer fuel
prices in accordance with market rates, the seventh decrease since
August (Ref B). End Summary.


2. (U) Sixty-five Jordanian oil transportation companies began a
two-day strike at noon on November 13 to protest what they
considered to be low fees for the transport of oil from the port of
Aqaba to the Jordan Petroleum Refinery Company (JRPC) in Zarqa. The
participants indicated during a November 9 meeting that the strike
would take place unless JRPC consented to their demands for an
increase in the per ton transportation rates for the 216-mile trip
from Aqaba to Zarqa. The group further demanded the expansion of
eligible bidders for the contract for transportation of crude oil
from Iraq to Jordan to allow more than just one company, current
contractor Al-Abraj, to take part. Following the June visit to
Jordan of Iraqi Prime Minister Maliki, the flow of discounted oil
from Iraq resumed, albeit at a trickle (Ref C). Oil is trucked to
the border and then off-loaded to Jordanian trucks for the rest of
the trip to the refinery.


3. (U) UTTO President Abdul Kareem Dirabani said the decision to
strike was in direct response to JRPC's refusal to meet to discuss
the UTTO-signed contract on oil transportation. Dirabani explained
UTTO signed a contract with JRPC in March 2008, which used a pre-set
formula to calculate trucking fees based on market prices for the
trucks' diesel fuel. He claimed this approach caused union members
to lose money as fees are adjusted retroactively and when world oil
prices fell, the companies were paid based on the most recent rate.



4. (SBU) Dirabani disputed union members' allegations of corruption
regarding the deal to transport Iraqi oil from the shared border to
the Zarqa refinery, saying the Ministry of Energy and Mineral
Resources (MEMR) handled the bidding process for oil transportation
with transparency. Only one company, however, Al-Abraj, was able to
meet MEMR's conditions -- providing JD7 million ($9.2 million) as a
deposit guarantee -- and therefore accept the risks associated with
transporting oil from Iraq. Al-Abraj representatives counter that
the bid was won "by the book" through the MEMR process. Regardless,
Dirabani considers the deal as insignificant, noting that, "barely
30 oil trucks crossed the borders daily" (Ref A).


5. (SBU) The truckers further demanded that JRPC address the issue
of contamination of oil loaded at the Port of Aqaba. Water often
seeps into the oil from the sea-going transport ships and the
truckers/transportation companies are held accountable. As a result
truckers are being paid only for the amount of oil that remains
after draining the water.


6. (SBU) The strike, resulting in some isolated fuel shortages in
Amman and the southern cities of Kerak and Tafilah, ended November
15 when JRPC's CEO met with union members. JRPC will reportedly
adjust transportation rates, using an undisclosed formula, so that
truckers are not financially penalized when market prices drop.
Fuel shortages, however, persist across the country, a combination
of JRPC delivery delays as a result of the strike and gas station
owners who refused to sell their stocks and lose money when the GOJ
lowered fuel prices in accordance with market rates.

Visit Amman's Classified Website at:

http://www.state.gov.sgov.gov/p/nea/amman/

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