S/CIEA GOLDWYN MEETS WITH NIGERIAN PETROLEUM UNIONS

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002100

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E.O. 12958: DECL: 10/14/2019
TAGS: ENRG EPET INV ELAB PGOV PREL PHUM EAID NI

SUBJECT: S/CIEA GOLDWYN MEETS WITH NIGERIAN PETROLEUM UNIONS

REF: ABUJA 2006

Classified By: Ambassador Robin R. Sanders for reasons 1.4. (b
& d).

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SUMMARY
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1. (C) U.S. State Department Coordinator for International Energy
Affairs (S/CIEA) David Goldwyn met with leaders of Nigeria's two
largest petroleum unions met with on November 11 to discuss union
perspectives on GON efforts to reform the petroleum sector,
specifically plans for downstream deregulation. The unions also
discussed U.S. companies' gradual shift toward temporary contract
labor, "unfair wages, and overall declining labor management
standards," which unions claim negatively affect livelihoods.
Goldwyn discussed the need for more transparency in the energy
sector, the benefits of more competition in the energy sector, job
creation, and the need to reform energy subsidies to increase
investment. Goldwyn's meeting follows months of labor union protest
rallies and calls for strikes over deregulation and precedes a
potential country-wide strike should these plans move forward without
the negotiated support of the unions. END SUMMARY.

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WE ARE NOT AGAINST DEREGULATION
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2. (C) Goldwyn met with leaders from Nigeria's two largest petroleum
sector labor unions: Petroleum and Natural Gas Senior Staff
Association of Nigeria (PENGASSAN) and National Union of Petroleum
and Natural Gas Workers (NUPENG) on November 11. Trade Union
Congress (TUC) President Peter Esele also attended. (NOTE: TUC is
the national umbrella union for PENGASSAN, while the Nigeria Labor
Congress (NLC) represents NUPENG. Both TUC and NLC are Nigeria's
largest and most influential union coalitions. END NOTE.)
PENGASSAN, NUPENG, and TUC leaders all agreed that reform in
Nigeria's petroleum sector would be welcome. Esele clarified that
the petroleum unions are "not against deregulation," but rather
oppose the GON's "lack of proper planning to ensure transparency,
efficiency, and economic development for all Nigerians." More
specifically, Esele criticized the GON's deregulation plans for
having no controls in place to prevent importing and marketing of
petroleum refined products0yQVN7-6Uare key, but so are measures that ensure transparency.
Deregulation, if done correctly, will spur investment, create jobs,
and provide more access to power for the majority of Nigerians.


3. (C) NUPENG President Peter Akpatason noted that PENGASSAN and
NUPENG welcomed downstream competition, which would keep consumer
costs down. He added that the two unions played an important role in
Qcosts down. He added that the two unions played an important role in
promoting the 2003 Downstream Liberation Policy, which opened
opportunities for other prospective investors in the downstream oil
and gas sector. Akpatason criticized the GON for not including, in
either its deregulation policy or the Petroleum Industry Bill (PIB),
any focus on refinery infrastructure development, which he argued was
"another critical component to keeping costs under control." He
explained that "absent refineries and given increased demand for
refined petroleum products, the government has to rely on the
expensive option of importing refined products." Esele commented
that the poor state of port facilities creates additional problems
and costs, which domestic refineries could help control. He
explained that Nigeria's import facilities were never designed for
current petroleum demand, causing significant delays in offloading
and heavy demurrage costs. He added that import facilities also have
shallow jetties, which require lightering, as small vessels must
unload refined products from much larger vessels.


ABUJA 00002100 002 OF 002



4. (C) Several rounds of negotiations with the GON on deregulation
and the PIB have not produced any results, according to Esele. He
said that the GON held PIB stakeholder consultations simply to "check
off the box;" the GON has made clear its intention to proceed with
deregulation "with or without our consent." NLC Lagos Chairman Denja
Yakub told Labor Officer separately on November 10 that the TUC-NLC
National Executive Council will soon meet to approve a strategy for a
nation-wide strike, most likely beginning with a two-day warning
strike before progressing into a longer shutdown. Yakub complained
that "the GON is not listening, and therefore we will have no choice
but to strike as we did in 2007."

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U.S. OIL COMPANIES AND DECLINING LABOR STANDARDS
-------------- ---


5. (C) PENGASSAN Deputy President Mustapha Wali informed Goldwyn of
U.S. oil companies' declining labor practices. He claimed that
third-party outsourcing seriously threatened the livelihoods of union
employees. He explained that ExxonMobil and Conoco Phillips are
"using intimidation to respond to union requests for fair wages and
union membership for contract laborers who are doing the same work
for half the price." NUPENG President Akpatason asserted that the
gradual increase of contract labor among IOCs, including U.S.
companies, has led to worker exploitation. He alleged that thousands
of people have been hired as temporary contract staff, when in
actuality, many are employed under illegally revolving three-month
contracts, performing the same tasks, some of which last more than 15
years. Esele added that these people get "half the pay and with no
benefits." Akpatason also noted that the process of contracting
creates more layers of subcontracting, which results in not knowing
who is actually hiring and paying contract staff.


6. (C) Wali expressed similar discontent for U.S. oil companies for
violating national expatriate quota laws. Wali claimed that a
"disproportionate amount of higher-paid technical and management
positions go to foreigners," noting that Chevron hires "filled more
than three-quarters of top management positions with expatriates,
earning pay and benefit packages far exceeding those of Nigerians
performing the same work." Akpatason pointed out that an increasing
amount of expatriate workers are being hired from Asia to fill
blue-collar jobs.


7. (SBU) Goldwyn responded that promoting local content in this
sector is key, but it will take time to build the capacity necessary,
especially for technical jobs. He discussed the model of Trinidad
and Tobago. Nigeria needs to focus on building a solid higher
education system to churn out the engineers and geologists needed by
industry. An apprentice system, as advocated by the unions, has its
place, but doesn't go far enough.
Qplace, but doesn't go far enough.

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COMMENT
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8. (C) The unions' statement that they are not against deregulation
per se was a positive signal. They are likely to trade support for
this measure to gain concessions from the government in other areas,
such as job creation. The TUC and NLC have acquired greater strength
in mobilizing and organizing its members and forging alliances with
civil society organizations and other activists around popular
causes. Growing discontent and greater union strength could lead to
another nationwide union strike, resulting in further delays to
petroleum sector reform. Such an outcome could also galvanize
support for NLC and TUC's other priorities, such as IOC fair labor
practices, minimum wage reviews, and electoral reform (reftel). END
COMMENT.

SANDERS