Cablegate: Nigeria: Bi-Weekly Pol/Econ Updates for June 16-30, 2008

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E.O. 12958: N/A
TAGS: PGOV KDEM ECON EPET EFIN MOPS NI
SUBJECT: NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR JUNE 16-30, 2008

1. (U) The Following is a joint Embassy Abuja ConGen Lagos
compilation of June 16-30 political/economic highlights, which did
not feature in our other reporting, covering:

--Elections
--National Assembly
--Corruption
--State and Local Governments
--Economic and Business
--Oil and Gas
--Niger Delta
--Other News

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Election Tribunals, Electoral Reform
--------------------------------------------

2. (U) Press reports state that on July 11, the Court of Appeal in
Jos, Plateau State, will rule on Senate President David Mark's
appeal case. Mark challenged the lower tribunal ruling that
nullified his election and ordered new elections.

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National Assembly
-----------------

3. (U) The National Assembly formed a joint committee to harmonize
the two versions of the National Health Bill, which was recently
passed by both the House and Senate. The bill is an attempt to
guarantee a minimum health package for all Nigerians, especially
those living in poverty and in rural areas. The initiator of the
bill, and former Minister of Health, Professor Eyitayo Lambo,
expressed his satisfaction over the bill's harmonization as a sign
that it is moving forward and has a chance of being signed into
law.

4. (U) On June 18, the Senate conducted a first reading of the "Bill
to establish a national parole system in Nigerian prisons," in hopes
of decongesting prisons and assisting with the rehabilitation of
prisoners. The bill would allow for the release of inmates prior to
the end of their sentence based on good behavior. Unfortunately,
this would not apply to those who spend years awaiting trial due to
a backlogs in the judiciary, and who account for approximately 60
percent of the current prison population.

5. (U) House of Representatives Member Henry Dickson presented a
bill titled the "Media Responsibility Bill" to be considered at the
same time as the Freedom of Information bill, which many legislators
have refused to pass due to fears of media irresponsibility and
maliciousness. The new bill seeks to create a system of
registration and identification of media houses, editors, and
journalists, as well as set standards for professional conduct and
media best practices.

6. (U) The Nigerian Senate began an investigation into the
disbursement of N19.5 billion (USD 166.5 million) given to the
aviation sector during the Obasanjo administration. The Senate is
also investigating how the previous government allegedly spent N300
billion (USD 2.56 billion) on roads in 8 years without tangible
results. One of the startling revelations that emerged during
testimony by government officials and agencies is that N967 billion
(USD 8.26 billion) was actually spent on roads as opposed to the
earlier figure given of N300 billion. Former Finance Minister
Okonjo-Iweala has been called in to testify and explain the
expenditure.

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Corruption
----------

7. (U) On June 23, Kenny Martins, brother-in-law to former President
Obasanjo and coordinator of the Police Equipment Fund (PEF), along
with his deputy, Ibrahim Dumuje, were re-arrested and arraigned
before an Abuja High Court for allegedly embezzling N50 billion (USD
427 million) from the fund. The duo were first arrested in April
2008 following a petition written against them by some prominent
Nigerians including the Sultan of Sokoto for alleged misuse of PEF
funds; however, the court had later released them on bail. The
Economic and Financial Crime Commission (EFCC) issued a seven-day

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ultimatum on June 19 for the return of more then 50 billion Naira in
"gifts" (generally vehicles and money) given out from the PEF under
Martins' leadership.

8. (U) A Federal High Court in Lagos dismissed the application by
the former Ekiti State Governor, Ayodele Fayose (PDP), for dismissal
of the money laundering charge against him. Justice Tijani Abubakar
stated that the issues of the case could only be resolved through a
trial. The EFCC is prosecuting the former governor on 51 counts of
money laundering involving more than N1.4bn (USD 11.96 million), and
alleged collaboration with Biological Concepts Ltd. to steal state
funds through an Integrated Poultry Project. The trial will
commence July 29.

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State and Local Governments
---------------------------

9. (U) Governor Murtala Nyako (PDP, Adamawa State), who was just
re-elected in April 2008 after being removed from office by the
election tribunal, is now facing impeachment charges which include
"arbitrariness, high handedness and non-consultation with the
legislative arm in key decisions." Already, 24 out of 25
legislators in the Adamawa State Assembly have voted to serve
Governor Nyako with a notice of impeachment. The impeachment saga
has generated tension and anxiety in the governor's camp. Key
players from the ruling People's Democratic Party (PDP) including
President Yar'Adua and Vice President Jonathan are making frantic
efforts to resolve the impasse. (NOTE: Press reports on July 2,
just prior to release of this message, indicate that the PDP has
brokered an agreement between the Governor and members of the State
Assembly and that the notice of impeachment was withdrawn. END
NOTE.)

10. (U) Former governor of Anambra State Chinwoke Mbadinuju (PDP)
was arrested on June 30 on charges of forgery of a police report and
conspiracy relating to the murder of the former chairman of the
Onitsha branch of the Nigerian Bar Association Barnabas Igwe and his
pregnant wife in 2002. The arrest followed several years of court
cases and appeals, months of rumors of impending action, and hours
of courtroom antics immediately before the arrest. Mbadinuju is out
on bail and the court has adjourned until July 22.

11. (SBU) Oyo State godfather Lamidi Adedibu (PDP) died on June 11.
The 80 year-old Adedibu was infamous for a style of politics that
relied (more than most) on money, muscle, and influence peddling,
although in recent years, his influence had waned. (Comment: With
no clear successor, Adedibu's death will likely free state PDP
members formerly beholden to him for their positions to pursue their
own agendas. End Comment.)

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Economic and Business
---------------------

12. (SBU) On June 24-26 the U.S. Mission Nigeria held two concurrent
intellectual property rights workshops in Abuja. The Ambassador and
Minister of Commerce opened the workshop. (NOTE: We consider the
Commerce Minister's participation as a thawing and improvement in
relations based on efforts by the Ambassador and Econ offices. END
NOTE) More than 100 Nigerian government officials attended the
workshops that were led by U.S. Patent and Trademark Office and
Commercial Law and Development Program trainers. Additional details
on the workshops with be sent septel.

13. (U) In June the GON reported that in the first quarter of 2008
it collected 1.89 trillion naira (USD 16.1 billion) in revenue.
This represents an increase of 25 percent from the 2008 budget
estimate and 11 percent more that the last quarter of 2007. Oil
revenues accounted for 1.57 trillion naira (USD 13.4 billion- 83
percent of total revenue). The oil revenue was 3.8 percent less
than the last quarter of 2007, a 25 percent decrease from the 2008
budget estimate. Government officials claim the fall in non-oil
revenues was attributed to a decline in corporate tax payments.

14. (U) On June 22 Acting Director General of the Kano Chamber of
Commerce, Industry, Mines, and Agriculture, Abdullahi Muhammad Jidda
told the media that stakeholders in the Kano State Textile sector
are planning to create a garment manufacturers' village. Jidda

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reported that the garment village is expected to receive funds from
the GON's 70 billion naira (USD 598 million) Textile Development
Fund and will take advantage of opportunities available under the
African Growth and Opportunities Act.

15. (U) The Central Bank reported on June 23 that inflation for May
2008 rose to 9.7 percent over April's 8.2 percent. The rise is due
mainly to price increases in food items (rice and other staple
foods, fruits, cooking oils, and some non-alcoholic beverages),
household goods, diesel fuel and building materials.

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Oil and Gas
-----------

16. (SBU) On June 28, Chevron's labor unions agreed to suspend their
strike for two weeks, temporarily avoiding a complete shut down of
all production from Chevron oil fields. In addition to a pay
increase, the unions have been demanding that Managing Director Fred
Nelson be replaced as head of Chevron's operations in Nigeria.
Striking workers had blocked access to Chevron's headquarters in
Lagos and disrupted operations at the Escravos terminal. Oil
production, however, was unaffected.

17. (U) Local newspaper "This Day" reported that in remarks made
during a June 27 farewell meeting with the departing Venezuelan
Ambassador to Nigeria, President Yar'Adua said he will meet with
Venezuelan leader Hugo Chavez soon to discuss areas of mutual
interest, including cooperation in the petroleum sector.

18. (SBU) As of July 1, repairs were continuing to a pipeline in
Chevron's Escravos onshore swap fields that was blown up on June 22.
The attack took 120,000 barrels of oil per day offline. A Chevron
contact could not give an estimated time of repair, but said the
company has unimpeded access to the location of the rupture.
Chevron declared force majeure on some deliveries from the Escravos
export terminal, but loading continues at the terminal and the
company is producing oil from nearby shallow off-shore fields.

19. (SBU) Tony Chukwueke, head of the Department of Petroleum
Resources, has reportedly been placed on administrative leave on
June 17 after allegations of corruption in the 2007 oil block bid
round. Chukwueke was similarly suspended for two weeks in 2006
after allegations he improperly awarded choice oil blocks to a local
company during the 2006 mini-bid round. A committee set up to
review the bid round is due to present its report on July 8. A
Nigerian contact at an international oil company who has proven
reliable told Econoff o/a June 19 that Chukwueke had previously
depended on support from Obasanjo cronies to keep his position as
the chief of Nigeria's powerful oil industry regulator and as a
consequence he is unlikely to return from this suspension.

20. (SBU) The same Nigerian oil company contact noted above reported
that Minister of State for Energy Odein Ajumogobia and Presidential
Special Advisor on energy Dr. Rilwanu Lukman will meet with
President Yar'Adua in the third week of July to discuss Lukman's oil
sector reform proposal. The proposal has already been informally
sent to the President. The contact believes one outcome of the
proposal will be a complete shakeup of the Nigerian National
Petroleum Corporation (NNPC) management, including the removal of
all current operating business unit managing directors and the Group
Managing Director Abubakar Yar'Adua. Sulaiman Achimugu, the head of
NNPC's renewable energy division was mentioned as a possible
successor to Group Managing Director Yar'Adua (no relation to
President Yar'Adua), although appointment of an NNPC outsider
remains a possibility. It is also noteworthy that Shell contacts
have noted concern to us about reports that Lukman may be supporting
the rebuilding of some previous unbundled power sector companies.

21. (U) President Yar'Adua encouraged other downstream companies to
follow the example of fuel distributor African Petroleum (AP) which
is selling kerosene at 50 naira (USD 0.43) per liter, down from its
typical 60-100 naira per liter. Post officers observed long lines
at AP stations in Lagos as people scrambled to take advantage of the
discount. The President urged Nigerians living along the borders
not to exploit the reduced cost by reselling the kerosene in
neighboring countries. It is not clear, however, how long AP can
keep selling kerosene at this price. Post will continue to closely
monitor this issue.

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Niger Delta
-----------

22. (SBU) Security and oil company contacts say that local press
reports of an attack on a Shell facility along Bonny River on June
28 were likely actually accounts of a riverine gun battle between
government security forces (GSF) and armed men fleeing in a
speedboat that took place near Shell facilities on June 29. Two
naval personnel were killed. In an apparently separate incident
that same day in the town of Bonny, oil company contacts report that
2-4 government security personal died during a shoot-out between GSF
and local criminals. The Nigerian press reported on June 30 that
two by-standers, including a pregnant woman, were killed in that
incident.

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Other News
----------

23. (SBU) On June 25, Amma Pepple was sworn-in as the new Head of
the Civil Service the Federation of Nigeria, the leader of Nigeria's
civil service. She replaced Mrs. Ebele Okeke who was retired on
June 14th having attained the mandatory retirement age of 60.
Pepple, who is only the second woman to occupy this position, was
the Permanent Secretary in the Ministry of Finance before her
current posting. She had also served previously in various
ministries including Transport, Petroleum Resources, Information,
Commerce and Agriculture. (Note: The US Mission recently created
several working groups with the GON aimed at improving transparency
and fighting civil service corruption. These emerged from meetings
with Head of Service Okeke and U.S. Mission team in looking at ways
to address transparency and corruption issues. We are hopeful that
these initiatives will continue under the new leadership. End
Note.)

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