NLC strike: Nation’s economy in the doldrums

In the wake of the ongoing strike action which has led to massive protests across various parts of the country over Federal Government’s withdrawal of fuel subsidy, repair of the nation’s refineries and provision of basic amenities is key as fuel subsidy removal will cushion the current socio-economic implications in the country, writes ALEXANDER CHIEJINA

The implementation of the long-awaited removal of fuel subsidy has drawn public ire and pitched civil society against the government.  When the Federal Government finally implemented its action which jacked up the fuel pump price of Premium Motor spirit (PMS) otherwise known as ‘Petrol’ from N65to N141 per litre Sunday last week, Nigerians from all works of life took to the streets to protest against government's decision to remove popular fuel subsidies.

As tens of thousands joined demonstrations, the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC)-the two major umbrella bodies of workers’ unions in the country-showed no signs of backing down on their threat to paralyse the country with an indefinite strike and shut down oil production in Africa's top crude producer.

This led to organised private institutions such as manufacturing firms, banks, insurance, filling stations, shops, airports and schools to remain closed but small market sellers and roadside hawkers carried on trading. Ministries, departments and agencies, (MDAs) of government were not spared as they were closed down for work in spite of government’s call to workers to resume for duty with a threat of “no work, no pay issued.”

Meanwhile, protesters gathered at Ojota area of Lagos daily where speakers lamented the effect of the fuel subsidy and called on the FG to reverse the policy. Some of the protesters were seen putting on t-shirts with inscription which read “Kill Corruption, Not Nigeria.”
The protest is however believed to have been violent at Ikorodu Road as protesters marching down to Ojuelegba, Yaba, Surulere end of Lagos were reported to have clashed with the Police.

Furthermore, the weeklong strike action grounded Lagos and also affected most state capitals throughout the country where security agencies battled to control the situation. At Abuja, protesters marched through the popular Nnamdi Azikiwe Express Way and converged on Area 1, Garki Junction. Buoyed by the mammoth crowd, some key figures of the struggle warned the Government to heed the voice of reason and reverse its decision on fuel subsidy.

Speaking at the venue, Hussaini Abdu, Country Director, ActionAid in Nigeria, echoed the message that they would not give up until the government reverts to the status quo. Meanwhile, human and vehicular traffic increased in most parts of the city at Zuba, Kubwa, Gwarimpa, Mabushi, Jabi and Berger areas.

In Oyo State, the anger against the removal of fuel subsidy in Ibadan deepened with the takeover of several flash points in the mass rally by miscreants. The organised labour and civil rights groups continued their march on Ibadan streets with a rally at Idi-Odo Challenge, where speakers after another urged the people of the state to be united in their opposition to the subsidy removal.

The development in Delta State was different as hoodlums infiltrated the procession of protesters by running ahead of the procession to harass unsuspecting passersby and dispossessing some people of their mobile phones and other valuables.

At least four of the hoodlums were arrested by security personnel on patrol along the Warri-Effurn-Sapele Road after they were caught by the mob and were about to be lynched. In the meantime, government and many private offices, schools as well as numerous business outlets remained under lock and key.

It will be recalled that a similar strike in 2003 saw the country almost entirely shut down - and the government back down, reducing rather than scrapping the subsidy. While the strike is expected to affect oil workers too, industry sources do not expect the industrial action to significantly affect crude exports.

Despite being a major Organisation of Petroleum Exporting Countries (OPEC) oil producer, Nigeria has not invested in the infrastructure to produce refined fuel, and so had to import much of its petrol. With the subsidy, fuel was much cheaper in the country than neighbouring countries, so some of it was smuggled abroad.

In the interim, President Goodluck Jonathan made a televised address about a fortnight ago defending the removal of the subsidy and other government austerity moves.

“We must act in the public interest, no matter how tough, for the pains of today cannot be compared to the benefits of tomorrow,” President Jonathan disclosed.

The President insisted that deregulating the petroleum sector is the best way to curb corruption and ensure the survival and growth of the economy.

“The truth is that we are all faced with two basic choices... either we deregulate and survive economically, or we continue with a subsidy regime that will continue to undermine our economy and potential for growth, and face serious consequences,” President Jonathan stated.

He however revealed that top government officials will from this year take a 25 percent pay cut and foreign trips would also be reduced. The government opined that it will spend the $8billion (£5billion) it saves yearly by scrapping the subsidy on improving health, education and the country's erratic electricity supply. However, many Nigerians fear it is more likely to end up in the pockets of corrupt officials.

Economic implication

As the strike action continued, economic experts are already counting losses the country incurred following the sustained industrial action aimed at forcing the federal government to back out in the efforts to deregulate the downstream sector of the economy.

It is believed that Nigeria loses a whopping N158.93bilion daily to the ongoing strike by the organised labour and civil society groups over the removal of petroleum subsidy. For instance, banks, petroleum stations, manufacturing companies and the nation’s airports are closed for business.

Apart from the N158.93billion, lives and properties have been lost across the country due to the industrial action. The figure is said to be based on the projected Gross Domestic Product (GDP) for the 2012 fiscal year as contained in the national budget.

Speaking on a television programme last week Tuesday to shed light on the economic benefits of the removal of petroleum subsidy, Lamido Sanusi, Governor, Central Bank of Nigeria (CBN) hinted that an analysis of the GDP, which is a measure of activities that shows the productive capacity of all the sectors of the economy, revealed the financial loss to the strike.

Sanusi stated that the GDP was one of the most acceptable ways of computing the economic loss. The Apex Bank Governor however, did not give any figure.

Lending his view, Joe Wenegieme, director general, Abuja Chamber of Commerce, Industries, Mines and Agriculture (ABUCCIMA) noted that apart from quantifying the economic implication, the strike is bound to set the country backward in many other areas.

“The consequence of the strike action embarked upon by the NLC no doubt is enormous. It is the ordinary Nigerians that are suffering it. You know we are representative of organised private sector, we feel the pulse of the strike directly, so we know how it feels.”

Echoing the sentiment of Wenegieme, Niyi Labinjo, Secretary General, Indigenous Shipowners Association of Nigeria (ISAN), revealed that vessels belonging to indigenous ship owners have been lying idle on the waters.

Labinjo, who acknowledged that the country is losing huge amount of money in the nation’s maritime sector daily during the strike period, however noted that the strike was inevitable and for the common good of Nigerians.

“Like all other industries in Nigeria, our terminal operations have been suspended since Sunday night. No vessel operations are entertained and no containers are delivered to or released from the terminal. That means that container stocks in the terminal are stable and have not changed since Sunday night. Only that there are a number of vessels that will have arrived at anchorage and are queuing up to start operations as soon as we re-open,” said Koen De Backker, Chief Operating Officer, APM Terminal, Apapa port, stated.

It is gathered that over 29 vessels and tankers carrying petroleum products and perishable cargo such as fish have anchored at the nation’s ports in the last four days without dockworkers to offload the ships.

Government, labour talks inconclusive

Talks on Thursday night between the Federal Government and Labour on the resolution of protests trailing the removal of the subsidy on petrol were inconclusive. At the end of the meeting that lasted over three hours, Labour and government agreed to shift ground but no deal was struck.

Addressing State House correspondents after the meeting which held in the conference room of the first lady, inside the Presidential Villa, Abuja, Abdulwaheed Omar, President, NLC disclosed that the discussion is expected to continue at the weekend.

Asked if government and Labour were ready to shift ground, the NLC president said “it is part of the discussion. Of course all of us are trying to shift ground that is why I told you that we have had fruitful discussions. Unless and until we get a conclusive conclusion from the discussion, then that means we maintain the status quo.”

Esele, for his part said until a conclusion was reached on the matter, the strike would continue. The TUC President noted that the labour leaders would return to their constituencies to brief them on the progress of the meeting but assured that the meeting would continue at the weekend.

The NLC led by Abdulwaheed Omar, its president and TUC led by Peter Esele represented Labour at the talks, while President Goodluck Jonathan some governors and principal officers of the national assembly led by David Mark, represented government.

Senate President David Mark had on Thursday morning met with President Goodluck Jonathan over the fuel subsidy removal and later had a meeting with the leadership of Labour before rejoining the president to meet with the labour leadership.

On the side of the executive were Vice President Namadi Sambo, Rotimi Amaechi, governor of Rivers State, Liyel Imoke, governor of Cross River State, Adams Oshiomhole, governor of Edo State, Raji Fashola governor of Lagos State, Gabriel Suswam, governor of Benue State, Babangida Aliyu of Niger State and Peter Obi of Anambra State.

Mark, Ike Ekweremandu, deputy senate president and Victor Udoma Egba, senate leader, represented the upper legislative chamber, while Mike Oghiadomhe, chief of staff to the president, Pius Anyim, secretary to the Government of the Federation, Ngozi Okonjo-Iweala, co-ordinating minister for the economy and minister of finance, Olusegun Aganga, minister of trade and investment, Dieziani Allison-Madueke, minister of petroleum resources, Oyenbuchi Chukwu, minister of health attended on the side of the executive.

The meeting comes as Nigerians began facing unprecedented hardship as the cost of living skyrockets, forcing many to begin a gradual return to their businesses in what they say is in the best interest of their families.

In parts of the Lagos metropolis, a litre of petrol is selling for as much as N375 in the black market. But even at this price, many are seen in the streets with jerry cans seeking to buy the now scarce product. In areas where the strike is not total, filling stations that dare to open their gates, do so only at nights, and only to black marketers who resell to the residents and motorists at exorbitant prices.

Already, many residents say they are tired of sitting back at home, as the strike is taking its toll on their incomes and family welfare, having exhausted their stockpiled foodstuffs.

Across the country, Automated Teller Machines (ATMs) at branches of most commercial banks visited by BusinesssDay have been drained of cash, a development that is further worsening the situation for many residents who had hoped that there would be an early resolution of the impasse between the Federal Government and the organised Labour.

Removal of fuel subsidy

Even as protesting Nigerians led by the Organised Labour demand the government to revert fuel price to N65 per litre, Diezani Alison-Madueke, Minister for Petroleum Minister, said that retaining fuel subsidy would entrench the nauseating graft in the downstream sector of the oil industry, mortgage the country’s future and make it almost impossible for the government to check the corrupt activities of some oil marketers, who are reaping bountifully from oil subsidy to the detriment of most Nigerians and the economy.

The Minister, who spoke in an NTA programme during the ongoing strike action, disclosed that her experience as Petroleum Minister in the last 16 months showed that fuel subsidy was the main cause of corruption in the downstream sector of the oil industry.

“People want us to fight the oil cabal and yet they don’t want us to remove subsidy, which is the main cause of corruption in the sector. We can’t fight corruption in the downstream sector with our hands tied,” she said.

Besides, Alison-Madueke urged Nigerians not to be unnecessarily hard on patriotic Nigerians, who played key roles in ensuring steady fuel supply in the county as oil marketers. “There are innocent marketers doing genuine business to keep Nigeria wet. We must not mix them with the corrupt ones. We shall go after the corrupt ones,” the Minister hinted.

Lamenting that countries around Nigeria sell fuel at a gross higher rate even with the N141 per litre price, Allison-Madueke noted that it was not possible to ensure zero smuggling of fuel at the borders, even as the United States of America had not been able to achieve.

According to her, fuel price in some neighbouring African countries in Naira are as follows:  Chad, N210; Ghana, N175; Niger, N181; Benin Republic, N167 and Morocco, N198.

While urging Nigerians to buy into the deregulation policy in the interest of the country, the Petroleum Minister stated that government wanted to leave a lasting legacy for the country and would embark on reforms to ensure a brighter Nigeria.

“We have only one country, one Nigeria. We want to leave a legacy for us to be remembered for in future. We want to ensure that we can look back after the next three years and say we managed well the temporary pains that came with the removal of fuel subsidy,” she concluded.

Way forward

It must be stated that the cost of such strike is usually heavy on the economy and citizens. Past governments had tried, though not effectively, to enlighten Nigerians on the dynamics of fuel subsidy.  The President Goodluck Jonathan administration deepened the education with the revelation that the beneficiaries of fuel subsidy are not the masses but a few wealthy Nigerians and those in the business of importing and distributing fuel.

It has also become clear the fuel subsidy arrangement is riddled with putrefying and massive corruption, as some importers of fuel products inflate the cost from the international market, which runs into billions of Naira.

This is with the understanding that government will offset the outlay as usual and subsidise it for Nigerians. 

Last year alone, the Federal Government spent over N1.3 trillion on fuel subsidy, leaving it with less funds for infrastructural projects that would impact positively on the lives of Nigerians in general.

To continue bearing the burden of fuel subsidy creates an ugly situation in which the Nigerian government indirectly encourages round-tripping and undue profiteering, as fuel would continue to be smuggled across the Nigerian borders. 

The continued fuel subsidy has since created a regulated market that has been a disincentive to potential investors in the business of refining petroleum products in the country, thus denying Nigeria of valuable job creation investments that would boost the country’s GDP.

While Labour Unions reserve the right to react to issues or policies they perceive unfavourable, our experience in this country has shown that reacting through strike actions that paralyse economic activities and even threaten peace and stability is not the proper option.

It is believed that NLC and other civil organisations seeking other ways of engaging government on the issue of fuel subsidy removal is important without paralysing economic activities further or creating conditions of insecurity especially in the face of the ongoing onslaught of the Boko Haram sect.

It is pertinent to state that policy-makers and the Nigerian masses should have a common understanding of the nature and components of subsidy. It is believed that having a vibrant anti-corruption policy, repair of the country’s refineries, as well as provision of basic amenities as the subsidy from fuel is withdrawn will go a long way in cushioning the socio-economic implications this will have on Nigerians.