Nigerian Unions, Government Fail to Resolve Subsidy Stalemate

Posted January 15th, 2012 at 12:45 pm (UTC-5)
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Nigeria's labor unions say a nationwide strike will continue Monday after negotiations with the government over fuel prices failed.

Union representatives also announced they have backed off an earlier threat to stop oil production.

During negotiations Saturday, union leaders called on the government to return fuel prices to the levels before $8 billion in consumer fuel subsidies were eliminated at the beginning of this month. After hours of wrangling, the two sides ended the talks without compromise.

Another round of negotiations were expected on Sunday.

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. Last Monday, workers unions started a five-day-long strike that virtually paralyzed Africa's top oil-exporting country.

In the meantime, many Nigerians have been rushing to stores and markets to stock up on food, only to find that prices have skyrocketed – in some cases, by a factor of three.

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.

President Goodluck 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.