Lagos (Platts)--5Jun2007

Nigeria's new government will not reverse a 15% fuel price increase that
has triggered fears of a nationwide strike that could halt exports in Africa's
leading oil producer.

     Both the white-collar Pengassan union and its junior counterpart Nupeng
have agreed to team up with other labor groups to call a strike on June 14 if
the government fails to reverse the increase in gasoline price announced on
May 28.

     State-owned NNPC's spokesman Levi Ajuonuma Tuesday said fuel prices are
not fixed based on sentiments or political considerations. "Price increases
are based on economic consideration and not politics. Every drop of fuel
consumed in the country is imported and the prices of these products as well
as the cost of freight and insurance can be ascertained on the internet,"
Ajuonuma told Platts. "Since every drop we utilize is imported, the prices can
be viewed against that at which it is dispensed at the pumps," he said. 

     The NNPC is the sole importer of gasoline. The government said it spends
Naira 250 billion ($2 billion) annually on subsidizing fuel imports in order
to keep domestic pump prices low. 

     The 15% price increase was introduced just 24 hours before president
Olusegun Obasanjo stepped down on May 29 after eight years in office, handing
over to Umar Yar'Adua.

     Under Obasanjo, fuel prices were hiked at least 10 times as his
government embarked on a policy of deregulating the downstream oil sector.