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 NOFORN SIPDIS STATE PASS USAID/AFR/SD FOR CURTIS, ATWOOD AND SCHLAGENHAUF STATE PASS TO USTDA-PAUL MARIN, EXIM-JRICHTER STATE PASS USTR FOR AGAMA STATE PASS TO OPIC-BARBARA GIBIAN AND STEVE SMITH STATE FOR EEB/ESC DOUG HENGEL, EEB/ESC /IEC/ENR-DAVID HENRY STATE FOR S/CIEA-DAVID GOLDWYN AND MICHAEL SULLIVAN JOHANNESBURG FOR NAGY USDOE FOR GEORGE PERSON AND THOMAS SPERL TREASURY FOR ANTHONY IERONIMO, ADAM BARCAN DOC FOR 3317/ITA/OA/BURRESS AND 3130/USFC/OIO/ANESA/REED 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). -------------- SUMMARY -------------- ¶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. -------------- WE ARE NOT AGAINST DEREGULATION -------------- ¶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." -------------- --- 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. -------------- COMMENT -------------- ¶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