The meeting held last night between the federal government and organised labour aimed at averting threats of a crippling nationwide strike by the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) to protest the removal of the subsidy on petrol and the consequential hike in the price of the commodity ended in a deadlock, as both sides remained unyielding but have agreed to continue the meeting today at 3 pm.
Sources who participated in the meeting said the unions informed the government team that they would only rescind their resolve to embark on the nationwide strike if it accepted their demands for a review of the minimum wage, improvement in the palliatives to cushion the effects of the fuel price hike on the citizenry, and reconstitution of the board of the Petroleum Products Pricing Regulatory Agency (PPPRA).
A source said that though the government team acknowledged that their demands were genuine, they informed the union representatives that their insistence on a review of the minimum wage was ill-timed and could not be met due to the precipitous drop of government revenue brought on by low oil prices.
He explained, however, that the government representatives promised that certain palliatives had been included in the 2016 budget to cater to the most needy in the society, but this was rejected by the labour unions who pressed ahead for their demand for a revision of the minimum wage despite repeated reminders that the federal and several states government were finding it next to impossible to meet the current wage bill of civil servants.
The meeting which kicked off at about 6.30 pm had in attendance Mr. Ayuba Wabba, the factional President of NLC, Mr. Joe Ajaero, President of National Union of Petroleum and Natural Gas Workers (NUPENG), Mr. Igwe Achese, and President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Olabode Johnson.
On the government side, the team was led by the Secretary to the Government of the Federation (SGF), Mr. Babachir Lawal; Minister of Labour and Employment, Senator Chris Ngige, President of the TUC, Mr. Bobboi Bala Kiagama, NLC General Secretary, Mr. Peter Ozo-Eson, and the acting General Secretary of Trade Union Congress, Mr. Simeso Amachree, among others.
Also in attendance were the Edo State Governor, Mr. Adams Oshiomhole who was there to mediate between both sides, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, Minister of Budget and National Planning, Senator Udoma Udo Udoma, and the Special Assistant to the President on National Assembly, Sen. Ita Enang, among others
Emerging from the meeting, which held in the SGF’s office till after 11 pm, Babachir informed journalists who had laid siege on the venue of the meeting that the “discussions were frank and honest”.
He said they decided to adjourn to today to resume talks at 3 pm.
Also commenting, Oshiomhole, who was once a president of the NLC and had led many strikes against fuel price hikes, tried to impress it on the unions that they would need to be flexible.
He said: You’ve organised strikes and those strikes have not helped in increasing wages. So it is time to make tough choices. The president is socially concerned but the fundamentals have changed.”
On his part, Wabba said: “We discussed those issues, including the demands we made. Then government presented its position, but as you are aware, our organisations are very democratic so we need to go back and consult before our meeting tomorrow (today).”
At a separate briefing, Achese said: To us, it’s not a surprise that government is considering deregulation, but our concern is: can we survive it?
“The present minimum wage is not sustainable. Government should have the political will to put smiles on the faces of the people through palliatives; until that is done, we will continue to fight, because Nigerian workers must see the dividend of what they voted for.
“However, whatever gains we realise from this deal, we will be able to invest it in building refineries.”
FG Defends Fuel Price Hike
Prior to the meeting between the federal government and labour, the Minister of Information and Culture, Alhaji Lai Mohammed had requested for the understanding of Nigerians and appealed to the unions to sheathe their swords.
Speaking to the press yesterday, the minister who was accompanied by the Group General Manager of the Nigerian National Petroleum Corporation (NNPC), Alhaji Garba Deen, said this was not the time for any action that would further worsen the nation’s economy.
He said the situation that warranted the removal of subsidy on petrol was dire, saying it was a global crisis and that the policy was designed to permanently solve fuel shortages.
“For instance, the United Arab Emirates, the third-biggest oil producer in OPEC, has become the first country in the oil-rich Persian Gulf to remove transport fuel subsidies.
“In addition, the country has announced that with effect from August 1, 2016, fuel prices will be deregulated,” the minister stated.
“Also, in response to fiscal pressure caused by the fall in crude oil prices, OPEC’s top oil producer Saudi Arabia has announced a plan to raise fuel prices. You can now see that this is indeed a global problem,” Mohammed said.
He added: “The truth is that the NNPC does not have the resources for, nor is it designed to meet this increase in supply. The result is the crippling fuel situation across the country.
“Pushed to supply 90 per cent of the products required for domestic consumption, the NNPC has continued to utilise crude oil volumes outside the 445,000 barrels per day allocated to it, thereby creating major funding and remittance gaps into the Federation Account.
“As I said earlier, there is no provision for subsidy in the 2016 budget. The erstwhile petrol price of N86.50 gives an estimated subsidy claim of N13.7 per litre, which translates to N16.4 billion monthly. There is neither funding nor appropriation to cover this.”
The minister further explained that the renewed insurgency and pipeline vandalism in the Niger Delta region have also drastically reduced crude oil production to 1.65 million barrels per day, against 2.2 million barrels per day planned in the 2016 budget, saying that this had further reduced earnings to Federation Account.
Describing the negative effects of the new policy as temporarily, Mohammed said that under the new price regime, the PPPRA and DPR would be further empowered to ensure a level playing field and strict compliance with market rules by all stakeholders and consumer protection
He said the liberalisation of downstream oil sector would allow marketers and any Nigerian entity willing to supply petrol to source for their forex and import the commodity to ensure availability of products in all locations of the country.
He also assured Nigerians that the federal government had included palliatives in the 2016 budget that will help to cushion the effect of the petrol price increase.
House in Rowdy Session
The federal government also got support from the House of Representatives, which at its emergency session held monday on the new fuel price regime, called on the NLC to shelve its planned strike.
But the resolution was reached after a protest led by members of the opposition Peoples Democratic Party (PDP) ahead of the admittance of Kachikwu to the lower chamber.
When the House convened, members for the PDP who were bent on scoring a political point against the administration and the ruling All Progressives Congress (APC), which championed the fuel price hike protests in 2012, began waving flags and singing “all we are saying, save Nigeria”.
The disruption lasted for about 22 minutes, during which Speaker Yakubu Dogara; Majority Leader, Hon. Femi Gbajabiamila; Minority Leader, Hon. Leo Ogor; and Hon. Chief Whip, Hon. Alhassan Ado Doguwa, held a private meeting.
Deputy Speaker, Hon. Yussuff Sulaimon Lasun, on the other hand, busied himself trying to placate the protesting members.
Eventually, the House dissolved into an executive session after order was restored. THISDAY gathered that the lawmakers, in the closed-door session, which lasted for over an hour, agreed to play safe by neither backing nor opposing the removal, but to wait for unfolding developments.
However, several lawmakers, THISDAY was informed, were said to have spoken on the need for the House to be bold and back the removal of fuel subsidy and call for the urgent implementation of palliative measures.
It was on this basis that the House resolved to ask labour to shelve the strike pending the report of the ad hoc committee, which would be submitted next week.
The lawmakers eventually constituted a 10-man committee to interface with the unions, civil society organisations and other stakeholders in the oil and gas industry.
Chaired by Doguwa, the committee is expected to submit its report in five days. Dogara explained that the lawmakers would further deliberate and take a position on the removal of subsidy after the ad hoc committee submits its report.
The committee was set up after the interactive session with Kachikwu, who disclosed that one of the immediate benefits of the subsidy removal was that state governments would find it easier to pay salaries.
In his presentation to the lawmakers, Kachikwu disclosed that 65 licences would be issued for modular refineries as part of efforts to boost local refining.
He dispelled reports of the non-engagement of the labour unions by the federal government before the announcement of the new regime for petrol imports and the hike in the price of the commodity.
The minister also explained that the price band of N135 to N145 was necessary, as it is the responsibility of the government to ensure that the pump price of petrol does not rise astronomically.
“There is never a right time to do this. Where we are today is a time thrust on us, it is inevitable,” Kachikwu said, adding that there would be no huge price differentials at NNPC stations and independent marketers to avoid chaos.
IPMAN Ready to Import
Also weighing into the new policy on fuel imports, the Independent Petroleum Marketers Association of Nigeria (IPMAN) monday said it had entered into a mutually beneficial business arrangement with several foreign partners to import about 15 cargoes of petrol into Nigeria within the next couple of weeks.
IPMAN said the arrangement would enable it access petroleum products from the partners, adding that it had secured their backing to keep fuel stations operated by its members supplied with petrol going forward.
It however said the current opposition to the federal government’s removal of subsidy on petrol by the labour unions was serving as an impediment from realising this plan.
“We have foreign partners who we will use to bring in products and we have an arrangement to bring in between 10 and 15 cargoes in the coming weeks,” said the General Secretary of IPMAN, Alhaji Danladi Pasali in a phone conversation with THISDAY in Abuja.
Pasali was responding to a question on how his members hope to source for forex to fund its imports.
“We are waiting for our papers. We have not got the papers released yet and we are waiting for that before we can go out because it is now an open market.
“It is because of this distraction of labour, otherwise, we would have started within the week. Labour however has to understand that this is the best way to go. If they don’t want this, what then is their solution so we can continue to bring in products? We don’t have to deceive ourselves on this,” he added.
IPMAN’s statement came as the Nigerian Association of Road Transport Owners (NARTO) also expressed support for the policy removing the subsidy on petrol.
NARTO said they were backing the government’s decision on the grounds that it will lead to the availability of petrol at service stations across the country.
A statement signed by the national president of the association, Kassim Ibrahim Bataiya, said that they had consulted with all their national officers and zonal chairmen immediately after the policy was announced and a consensus was reached in support of it.
Bataiya said the policy would also engender competition among marketers, as was the case with diesel that was deregulated in 2007.
Oil Rises to Six Months High
Meanwhile, crude oil prices monday hit a six months high as outages in Nigeria and Venezuela reduced exports to the international market, which has suffered a glut in the last 23 months.
Brent crude futures rose by $1.22 or 2.5 per cent to $49.05 per barrel, just a few cents short of reaching $50 a barrel during yesterday’s trading, while US WTI futures rose by $1.44 or three per cent to $47.65.
Crude futures have rallied for most of the past two weeks from a combination of non-OPEC supply outages, declining US production and virtually frozen inflows of Canadian crude after wildfires in Alberta’s oil sands region.
Nigeria’s oil output has fallen to its lowest in decades after several acts of sabotage by a new militant group, Niger Delta Avengers (NDA), resulted in a drop to 1.65 million barrels per day (mbpd) from 2.2mbpd.
Reuters reported that in the Americas, US officials also warned they were increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices, where crude production has also been falling due to power shortages.
The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another oil price crash to as low as $20 per barrel.
“The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected,” Goldman said.
“The market likely shifted into deficit in May … driven by both sustained strong demand as well as sharply declining production,” the investment bank added.
While Goldman sounded more positive on the market than it did before, it also cautioned that at around $50 a barrel, supply could flip back into a surplus in the first half of 2017 if exploration and production activity picked up later this year.