Cablegate: Nigeria: Bi-Weekly Econ Updates for November 15-30, 2008

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DEPARTMENT PASS TO USTR-AGAMA
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TAGS: PGOV ECON ELAB EPET EFIN EAGR KDEM NI
SUBJECT: NIGERIA: BI-WEEKLY ECON UPDATES FOR NOVEMBER 15-30, 2008

REF: A. Abuja 2129
REF: B. Abuja 2339

1. (U) The following is a US Mission Nigeria compilation of November
15-30 political and economic highlights, which did not feature in
our other reporting, covering:

- - CORRUPTION
- - DELTA INCIDENTS
- - OIL AND GAS
- - AVIATION
- - FISCAL RESPONSIBILITY
- - HEALTH
- - ECONOMIC
- - POLITICAL

CORRUPTION
- - - - - -
2. (U) On November 24, Lagos High Court Judge Tijani Abubakar
granted former Enugu Governor Chimaroke Nnamani leave to travel to
the United States, in spite of opposition from the Economic and
Financial Crimes Commission (EFCC). Nnamani is standing trial on
charges of fraud, conspiracy, concealment and money laundering
totaling 5.6 billion naira ($48 million). Nnamani told the court
that he was representing the Government of Nigeria at the 63rd
session of the United Nations General Assembly in New York and
needed additional time to visit his family in the United States.
Earlier this year, Nigerian courts released the travel documents of
three other indicted Governors currently on trial for money
laundering and official corruption: Ayodele Fayose of Ekiti State,
James Ibori of Delta State, and Orji Uzor Kalu of Abia State. The
three Governors cited medical reasons to support their applications.
The courts overruled EFCC prosecutors' objections that releasing
their passports would cause trial delays and potentially lead to
evidence tampering.

DELTA SECURITY INCIDENTS; NO AMCITS INVOLVED
- - - - - - - - - - - - - - - - - - - - - - -
3. (U) "This Day" newspaper reported that a British oil worker was
kidnapped on November 27. The worker was traveling alone in an
upscale area of Port Harcourt and was reportedly off duty at the
time.

4. (SBU) Militants briefly hijacked the MV THOU GALAXY on November
16 near Escravos, Delta State, releasing the vessel and its 10
person Filippino crew on November 18. Local daily "The Punch"
reported that militants were demanding the release of the MT AKUADA,
seized by the JTF on November 14 for allegedly participating in
illegal oil bunkering. (Note: Some Niger Delta residents allege
that the JTF seizes only those ships that don't adequately "settle"
the JTF to ensure safe passage. End note.)

5. (U) On November 18, Chevron declared force majeure on deliveries
of 90,000 barrels of oil per day until December 31 after an attack
in Delta State, which damaged the Abiteye-Olero pipeline that feeds
the Escravos Terminal. The damaged pipeline forced Chevron to shut
down most of its onshore fields in Delta State. The same pipeline
was damaged as a result of an attack in June 2008, forcing Chevron
to declare force majeure on 120,000 barrels of oil.

6. (SBU) On November 20, the local press reported that the JTF
repelled militants who attacked their positions near the Escravos
Terminal. A subsequent press statement by the "Ijaw Youth Leaders
Forum" (IYLF) demanded the removal of General Wuyep Rimtip, head of
the JTF in the western Niger Delta. In the statement, the IYLF
threatened attacks on the Escravos facility, including the oil
terminal and Chevron's massive gas-to-liquids plant currently under
construction. (Note: Senior Chevron executives have told Energyoff
that they credit General Rimtip for stopping oil theft from their
pipelines and wells in Delta State. End note.)

OIL AND GAS
- - - - - -
7. (SBU) On November 20, local papers reported that the Federal
Executive Council has ruled out any decrease in the pump price of
gasoline, currently fixed at 70 naira per liter ($2.26 per gallon).
(Comment: A reduction in the retail price of gasoline was never

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likely, despite trade union demands. While still spending a
significant amount on fuel subsidies, lower oil prices have reduced
the financial pressure on the GON to raise the retail price of
gasoline, something it reportedly considered earlier in the year
when oil prices were at record highs. End Comment.)

8. (SBU) On November 26 the Chairman and Managing Director of one of
Nigeria's largest and oldest indigenous oil companies told EnergyOff
that President Yar'Adua promised his Special Advisor to the
President on Petroleum Matters, Dr. Emmanuel Egbogah, that he would
be the new energy minister. It appears now, however, that Rilwanu
Lukman will instead fill that position, which according to the
Chairman, was the result of pressure from northern leaders who
insisted that the job go to their fellow northerner. The Chairman
also repeated an earlier claim that Lukman reluctantly accepted the
offer, but with the condition that he leave the position after one
year. (Note: Many local oil executives believe that in addition to
his health problems and outside business interests, Lukman's
hesitance stems from the fact he actually lives in Geneva,
Switzerland, and does not want to take up residence in Nigeria
again. End Note.)

9. (SBU) The Managing Director for Petrobras Nigeria told EnergyOff
on November 26 that 2009 was shaping up to be a bad year for the
local industry, noting the continuing high cost of operations in
Nigeria. When asked about his company's future in light of big oil
discoveries off the coast of Brazil, the executive said Petrobras
was scaling back its operational and expansion plans in Nigeria to
focus on opportunities closer to home.

AVIATION
- - - - -
10. (U) On November 11, the press reported that the UK Royal
Aeronautical Society will help Nigeria in determining the causes of
aircraft accidents and weather related air crashes. The purpose of
the collaboration is to help Nigeria minimize and eliminate airplane
accidents.

FISCAL RESPONSIBILITY
- - - - - - - - - - -
11. (SBU) On November 10 EconCouns, Acting Deputy AID Mission
Director, AID Officer and head of USAID REFORMS project met with the
governors of Benue, Akwa Ibom, Sokoto, Kwara, Bauchi, and Ekiti
States. Minister of Finance Usman chaired the meeting, which
focused on state-level responsibility and procurement and resulted
in an agreement to set up a joint working group to harmonize and
facilitate the implementation of related legislation across the 36
states. The Minister and some governors emphasized effective law
enforcement and administration, peer review, donor technical
assistance, fiscal responsibility, effective procurement, and
avoiding delays in executing budgets, the latter having been a
problem following adoption of the national fiscal responsibility
law. Usman also informed donor representatives that he was chairing
a Presidential Committee to explore the possibility of a sovereign
wealth fund coordinated among federal, state and local levels of
government.

12. (U) As reported in the press on November 14, Director General of
Budget Office Bright Okogwu stated 91 percent of the 2009 budget
will be allocated to the capital budget, of which 46 percent will go
for infrastructural development. According to Okogwu, 11.9 percent
of the entire budget will go for power, believing that the
government would generate an additional 6000 mega watts of
electricity in 2009.

HEALTH
- - - -
13. (U) In response to the rise of incidents of polio in northern
Nigeria, the World Health Organization (WHO) reported that it is
recruiting and training local chiefs to renew interest in polio
immunization. The polio immunization campaign started on November
13 in Gezawa village, 20 kilometers (12 miles) north of Kano. Kano
state has been the epicenter for the transmission of the polio virus
to other parts of the world for the past five years. According to
the WHO figures, Nigeria has recorded 740 new polio cases in 2008
with Kano accounting for 267, compared to 286 cases countrywide in
2007, 57 of them in Kano (reftel A).

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ECONOMIC
- - - - -
14. (U) On November 14, the media reported that importers smuggled
over 17 billion naira ($144 million) worth of fabrics from Dubai
into Nigeria every year, despite the import ban on textiles.
Smuggling and infrastructure problems have led to a drop in the
number of operational textile factories, from 140 to 10. Some
industry observers claim that the Nigerian textile industry uses
outdated equipment and the 70 billion naira ($593 million) GON fund
for the textile sector has not made much difference. Meanwhile,
Nigeria's textile unions recently organized a large conference on
November 26, attended by Labor Attache, to address the illegal
importation of Chinese fabric being advertised as made in Nigeria.

15. (SBU) At a reception on November 29, an executive with the South
Africa's Nedbank informed the Consul General that the bank has plans
to open a branch office in Maersk House in Lagos. Additionally, the
executive said Nedbank plans to acquire two "third tier" Nigerian
banks which will give them over 400 branches nationwide.

POLITICAL
- - - - -
16. (SBU) From November 25-26, PolCouns and PolOff travelled to
Kaduna to meet with former Nigerian Head of State General Muhamadu
Buhari (see Ref. B); present a paper for an Anti-Corruption Summit
sponsored by the Nigerian House of Representatives; and speak at a
Nigeria Textiles Union conference. Buhari told PolCouns that his
political campaign structure remains in place to galvanize voter
support, should the court annul the 2007 Presidential election. The
next day, at what was supposed to be a major anti-corruption
"summit" sponsored by the Nigerian House of Representatives,
PolCouns presented a paper on corruption and good governance to a
sleepy audience of about 70 participants. PolCouns challenged those
present to address Nigeria's endemic corruption as a key step in
reversing the country's long history of underdevelopment; the summit
facilitator, however, quickly moved on to the next speaker, Aminu
Bello Masari, who feigned great concern in the need for
anti-corruption vigilance. At a textile union conference later in
the afternoon, Labor Attache conveyed to conference participants the
USG interest and support for workers' rights, corporate
responsibility, and the Nigerian labor movement to the extent it
promotes democratic values and economic development.

17. (U) On November 20, the Nigerian National Assembly (NASS)
commenced its long-awaited review of the 1999 Constitution. Topping
the agenda were the issues of federalism, revenue allocation, state
creation, and electoral reform. Senate President David Mark assured
that the legislative exercise would include other stakeholders and
highlight civil rights and civil liberties, the separation of
powers, checks and balances, strengthening of judiciary, and freedom
of the press. Mark also claimed that when completed, the exercise
would enhance legitimacy and guarantee a "people's constitution."
Mark further charged the committee to consider revenue allocation,
federalism, the immunity clause, council administration, state
creation, and electoral reform as other urgent areas.

SANDERS

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