Nigerian Unions, Government Fail to Resolve Subsidy Stalemate

Posted January 14th, 2012 at 11:35 pm (UTC-5)
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Nigeria's government and union leaders failed to reach an agreement late Saturday to end a week-old strike, but the union has backed off its threat to stop oil production.

The president of Nigeria's Labour Congress told reporters oil production will not be shut down and that “We are taking these things gradually.”

The NLC spokesman suggested talks could resume Sunday.

In the first of two meetings Saturday, union leaders held talks with President Goodluck Jonathan and other officials about the ending of consumer fuel subsidies, which came into force January 1. After hours of wrangling, both sides said the meeting ended without a compromise.

Union leaders called a temporary halt to the strikes in advance of Saturday's meeting with President Jonathan in Abuja, but said the strikes would resume Monday if the subsidies are not re-instated.

The government's decision to end fuel subsidies has caused fuel prices to double and led to increases in food and transportation prices. Tens of thousands of people have been taking to the streets to express their anger. Workers unions started a 5-day-long strike that virtually paralyzed Africa's top oil exporting country.

One of Nigeria's major unions has said it will stop oil production in Nigeria if the government does not restore fuel subsidies – a move that could have an impact on the country's economy and affect global oil prices.

In the meantime, many Nigerians have been rushing to stores and markets to stock up on food, but many were confronted by food prices that had tripled in some cases.

Nigeria exports more than 2 million barrels of crude oil a day. Experts say it is not clear 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.

News that the strikes could cause the county's oil industry to shut down have since caused world oil prices to climb.

President Jonathan and his government eliminated the fuel subsidy on the grounds that Nigeria can no longer afford the $8 billion program. 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.