Cablegate: Nigeria: Biweekly Pol/Econ Updates for Sept 16-30, 2008

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RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEHNSC/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 03 ABUJA 002008

SENSITIVE
SIPDIS

DEPT FOR AF/W, INR/AA
STATE PASS TO USTR-AGAMA
DOE FOR GEPERSON

E.O. 12958: N/A
TAGS: PGOV PHUM ECON EPET ETRD ELAB NI
SUBJECT: NIGERIA: BIWEEKLY POL/ECON UPDATES FOR SEPT 16-30, 2008

REF: A. Abuja 1925

THIS CABLE IS SENSTIVIE BUT UNCLASSIFIED. NOT FOR INTERNET
DISTRIBUTION.

1. (U) Following is a joint Embassy Abuja-ConGen Lagos Compilation
of September 16-30, 2008 political/economic highlights, which did
not feature in our other reporting, covering:
-- National Assembly
-- Corruption
-- Military Affairs
-- Labor
-- Economic News
-- Oil and Gas
-- Criminal Justice

National Assembly
-----------------
2. (SBU) MEMBERS OF THE HOUSE SEEK TO INTRODUCE LEGISLATIVE
DIMENSION TO YAR'ADUA'S 7-POINT AGENDA: Nine Representatives have
formed a group to promote the enactment of legislation for each of
the objectives in the President's 7-Point Agenda. "The 7-PAG", or
"The 7-Point Agenda Group", came together in July 2008 before the
National Assembly's recess. On September 18, Poloff met with the
group's Coordinator, Representative Samson Osagie (People's
Democratic Party (PDP), Edo State) in response to a letter of
introduction sent to the Embassy. Osagie said the group sees a
"disconnect" between the executive and legislative branches of
government in Nigeria. Therefore, 7-PAG aims to get the House to
support each point of the President's Seven-Point Agenda with
legislation. Osagie specifically highlighted education,
infrastructure, and agriculture as target areas for improvements.

3. (U) NATIONAL ASSEMBLY JOINT COMMITTEE ON THE REVIEW OF THE 1999
CONSTITUTION (JCRC) EXPANDS MEMBERSHIP TO 88: On September 25 the
Guardian Newspaper quoted JCRC Chairman, Ike Ekweremadu as saying
that the committee has 44 members from the House and 44 from the
Senate (with one member of the House and one Senator from each
state, one member of the House and one Senator from the Federal
Capital Territory, and one additional representative from each zone
to ensure women's interests were covered). Ekweremadu added that
the committee would be inaugurated when the National Assembly
resumes on October 7. (NOTE: On October 8, the joint committee
encountered another setback when the House refused to inaugurate its
portion of the committee, without public explanation. The federal
budget money put aside for the exercise will expire if not spent by
the end of the calendar year. END NOTE.)

Corruption
----------
4. (U) NIGERIA IMPROVES ITS RATING TO 121 OUT OF 180 MOST CORRUPT
NATIONS: Transparency International (TI), a global civil society
organization, rated Nigeria 121st in a September survey of 180 most
corrupt nations. In 2007, Nigeria ranked 147 and three years
earlier 152. TI noted that Nigeria was among several countries with
significant improvement in the battle against corruption. In terms
of the actual corruption perception index (CPI), Nigeria moved from
a score of 2.2 in 2007 to a score of 2.7 in 2008. CPI measures the
perceived levels of public sector corruption on a scale from zero
(highly corrupt) to ten (highly clean), and carries a plus or minus
.3 margin of error.

5. (U) IBORI'S LAWYER ARRESTED: Former Governor of Delta State James
Ibori's lawyer, Bhadresh Gohil, was arrested in London and charged
with money laundering. Gohil, who works at the London law firm
Arlingtons Sharmas was arrested for helping the former governor
launder money, and breaking the UK Proceeds of Crime Act, between
2005 and 2008. Ibori was arrested last year by the Economic and
Financial Crimes Commission (EFCC) and arraigned before a Federal
High Court in Kaduna for alleged financial crimes running into tens
of billions of naira.

6. (U) EFCC FREEZES RIVERS STATE ACCOUNT: The Economic and Financial
Crimes Commission (EFCC), has frozen one of the accounts of the
Rivers State government over alleged money laundering. According to

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EFCC sources, up to $4 million was diverted from government accounts
to a fictitious account, allegedly by Nyeson Wike, Chief of Staff to
the governor of Rivers State.

Military Affairs
----------------
7. (U) MILITARY TO RECEIVE INCREASED BUDGET: After a September 16
meeting with the new Service Chiefs, the Office of the President
announced an increased military budget over the next two years "to
transform the armed forces (to become a) technology driven,
well-equipped force (made up of) highly motivated and contented
officers and men." While press reports did not give specifics, the
President is reported to have told the Service Chiefs that he is
aware of the challenges the military faces and the inadequacy of
current funding levels and that he hopes to begin to "see tremendous
improvement in the funding situation because of this change."

Labor
-----
8. (U) NIGERIAN LABOR MINISTRY INTERVENES IN DISPUTE BETWEEN NUPENG
AND CHEVRON: The Nigerian Labor Ministry has intervened in the
dispute between a local branch of the National Union of Petroleum
and Natural Gas Workers Union (NUPENG) and Chevron Nigeria Ltd.
(CNL) in an effort to avert a strike. NUPENG opposes the
casualization of the workforce, under which CNL employs its members
as contractors without pensions and other benefits. General
Secretary for NUPENG, Bernard Ugbi, warned that a strike will affect
production of approximately 700,000 barrels of oil a day. There is
no firm date yet to hold talks with the ministry and Chevron over
the labor issues. A Chevron spokesman in Nigeria declined to
comment on the dispute.

Economic News
-------------
9. (U) IMPORTS OF U.S. TALLOW INCREASE: Imports have soared in 2008
and are expected to reach nearly $80 million, up from $16 million in
2007. Nigeria is currently the third largest market in the world
for U.S. tallow. The rapid growth has been caused by two major
factors: Overall growth in soap manufacturing in Nigeria and reduced
competition from domestically produced palm oil. While tallow
imports have been at record levels this year, industry sources
indicate that these imports could slow next year. In August 2008,
the GON lifted the prohibition on the importation of soap noodles
and flakes and instituted a 20 percent duty on these products.
Industry sources expect strong competition in the next year from
soap noodles and flake supplies from major palm oil producers in
Malaysia and Indonesia. The price of imported soap noodles is often
cheaper than domestically produced soap largely due to very high
Nigerian manufacturing costs resulting from routine power shortages.

10. (U) THE GON REDUCED IMPORT PROHIBITION LIST: The GON reduced the
number of goods on the import prohibition list from 43 to 26, but
instituted tariffs on the imported items up to 35%. On September
24, the Controller-General of the Nigerian Customs Services Hamman
Ahmed announced that all transactions and payments for customs
services would be done though e-payment starting October 1. See
reftel A.

11. (SBU) EKITI STATE ECONOMIC SUMMIT: Participants at the
poorly-attended Ekiti State Economic Summit, held June 25-27 at the
Ekiti Trade Fair Complex, complained about the lack of development
planning and planning capacity, inconsistency in government policy,
and the futility of public-private partnerships when no public
capacity exists. Governor Oni's (PDP) presentation focused on
investment opportunities within the state, listing accomplishments
of his administration to lukewarm applause. Oni prioritized the
dairy, brick, ethanol, biodiesel, farm fencing/gate, and cattle
industries as state priorities. Frustrations were evident among the
presenters; one was particularly critical, linking good economic
development indicators to good governance. He spoke directly to an
unimpressed Governor Oni, saying that government's job is to make
good use of fiscal tools at its disposal and to invest in its
institutions, human capital, infrastructure and direct production in
order to create sustainable development. PolOff visited the Ikogosi

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Warm Spring Resort, touted by Oni as the savior of the Ekiti tourism
industry. The small, outdated facility consisted of spring water
piped into a swimming pool near a run-down hotel.

12. (SBU) ONDO STATE - FUEL DEPOT SHORT OF SUPPLY: During a
September 17 visit to the Ore, Ondo State Nigerian National
Petroleum Company (NNPC) depot, an assistant to the depot manager
told Poloff and PolSpec that the depot supplies petroleum products
to Ondo, Ekiti, Osun, Edo and Kogi states, and receives its supplies
from Mosimi, a major depot in Ogun State. During the visit only two
distribution trucks were observed being filled and four were waiting
in line. The manager said there was not enough fuel to fill all the
other trucks in the parking lot. If operating at full capacity, the
depot can provide 300,000 liters a day. However, theft along the
pipeline has reduced output. The depot was shut down following
extensive vandalization of the 151 kilometer pipeline; it reopened
in June 2006. Recently, the Niger Delta militant group MEND
reportedly issued a warning that it would blow up the pipeline if
the federal appeals court reinstates former Ondo State Governor
Agagu (PDP) to his post. Charges of fraud led an elections tribunal
to overturn his 2007 election.

Oil and Gas
-----------
13. (U) $62.5 OIL BENCHMARK FOR 2009 BUDGET: On September 24, the
Ministry of Finance announced a proposed $62.5 per barrel of oil as
the benchmark for the 2009 budget. MinFin projected oil output at
2.3 million barrels per day (bpd). The 2008 budget was based on a
projected production of 2.45 million bpd and a benchmark of $59 per
barrel. Nigeria started a process of crude oil benchmarking for its
budget in 2004 to compensate for the constant fluctuations of prices
in the oil market.

14. (SBU) PIPELINE RUPTURE IN DELTA STATE: A portion of the Chanomi
Creek oil pipeline in the Warri Southwest Local Government Area in
Delta State ruptured on October 1. The pipeline supplies crude oil
to the Warri refinery. It is not clear if the rupture was
accidental or the result of sabotage. The pipeline was the target
of repeated attacks in recent years. Government relations managers
for the Nigerian National Petroleum Corporation and Chevron said the
pipeline break did not disrupt supplies to the Warri refinery. NNPC
has reportedly awarded a $5.4 million repair contract to Fenog
Nigeria LTD, a Warri-based, Nigerian-owned company.

Criminal Justice
----------------
15. (U) LAGOS STATE - CRIMINAL JUSTICE REFORM: A June 3 workshop on
the Administration of Criminal Justice Law in Lagos State acquainted
stakeholders with changes to the Lagos State Criminal Administration
Law, passed in 2007 and now slowly being implemented around the
state. The law targeted specific weaknesses in administration
including delayed investigations, lack of information sharing among
agencies, absences of witnesses and investigators during court
proceedings, prison congestion, and frivolous defense objections
during court cases. Included in the law is the country's first plea
bargain provision, intended to reduce prosecutorial work load and
court costs.

16. (SBU) LAGOS STATE - CRIMINAL CASE TRACKING SYSTEM: A July 10
meeting with project managers for the British Council-sponsored
Lagos State case tracking system showed Lagos State's commitment to
modernizing its Ministry of Justice. Each of Lagos' five prisons,
the Ministry of Justice, the Police units and Court systems all
share information via this computerized system to better track
arrestees and their cases. Each agency has dedicated computers, but
because the computers are not yet connected, information is shared
via compact disk. However, project managers stated they are facing
increasing resistance from senior officials as the project goes
forward. Governor Fashola strongly supports the project, the
managers said, both institutionally and financially, with the result
that state institutions are less resistant than federal ones to the
project.

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