Negotiations Fail to End Strike in Fuel Subsidy Showdown

Posted January 12th, 2012 at 7:05 pm (UTC-5)
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Nigeria’s president and union leaders say a nationwide strike will continue, despite progress made during their first meeting since the action began.

Officials say the negotiations about whether to restore a popular fuel subsidy will continue on Saturday. That is just hours before another important deadline looms: a major oil union says it will join the strike Sunday if the issue is not resolved.

The Petroleum and Natural Gas Senior Staff Association said Thursday it would be forced to take “the bitter option” of shutting down oil and gas production if the government does not restore the subsidy, which was cut on January 1.

Nigeria exports more than two million barrels of crude oil a day. Industry experts say it is unclear exactly how much production would be affected by a strike, since much of the process is automated, but even a minor disruption could have an impact on the country’s economy and affect global oil prices. World oil prices climbed Thursday over news of the possible shutdown.

The United States said Thursday it was closely monitoring the situation. But State Department Spokesperson Victoria Nuland said the United States supports the right of Nigerians to protest peacefully. She said it was “incumbent on the government to encourage an environment that remains peaceful.”

Many businesses, shops and schools remain closed on Thursday as demonstrations continued for a fourth straight day in the commercial capital of Lagos and other cities.

President Goodluck Jonathan and his government eliminated the fuel subsidy on January 1, saying the nation can no longer afford the $8 billion program. The move caused full prices to double in a day.

Mr. Jonathan has promised to use the money on infrastructure and social programs.

Most Nigerians live on less than $2 a day and the fuel subsidy was one of the few benefits they received from the country’s oil wealth.

Some economists have said the subsidy was wasteful, but protesters have alleged that government corruption and mismanagement are responsible for the oil-rich nation’s sustained poverty.

While Nigeria is Africa’s biggest oil producer, it must import refined fuel because its own refineries do not have the infrastructure to do the job.