Cablegate: Dot Team Visit - Program Is On Course

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ABUJA 001630

SIPDIS

DEPT PASS TO DOT FOR SAMPLE

E.O. 12958: N/A
TAGS: ECON EAID SENV EWWT NI
SUBJECT: DOT TEAM VISIT - PROGRAM IS ON COURSE

1. Summary. A DOT team led by Senior Policy Advisor Kevin
Sample visited Nigeria April 13-26 to complete security and
environmental assessments at the Lagos Port Complex and to
discuss privatization of port services in Nigeria. The DOT
officials met the Senate Committee on Marine Transport,
officials of the Bureau of Private Enterprises (the GON
privatization agency), and the Ministry of Transport. The
team recommended that privatization of port services follow a
phased approach, emphasizing the need to include labor in the
planning and implementation process. The GON appears
committed to port privatization, although much work remains
before Nigeria can become a regional maritime hub. Problems
include the current policy of 100% port inspections and the
need to develop an adequate internal transportation
infrastructure. End Summary.

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Meeting With Senate Committee on Marine Transport
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2. On April 17, the DOT team briefed the Senate Committee on
Marine Transport on their mission in Nigeria, which was well
received by the Committee. Committee members agreed port
services needed to become more efficient and container
handling costs reduced for Nigeria to become a maritime hub
in West Africa, and that the best avenue to increase
efficiency and lower costs would be through private sector
participation.

3. DOT Senior Advisor Kevin Sample advised that port
privatization should be a phased process, involving training
and re-absorption of labor into the general workforce, with
the eventual aim of reducing labor opposition to
privatization. The Senators agreed with Sample that
privatization should not be rushed, and requested USG
assistance in the retraining of redundant port workers. The
Committee emphasized that port privatization is politically
sensitive due to the fear that workers would be laid-off and
unemployment would rise. Sample advised that maritime
workers should be included in the privatization decision
process in order to harmonize the views of all stakeholders
and minimize problems. He also believed the GON should
emphasize that only selected services at the ports should be
privatized, not the entire port. The Senators thought that
"private sector participation" instead of "privatization" was
a more apt and palatable term. Sample said DOT might be able
to assist by organizing a tour of the Mexican ports in
collaboration with the World Bank, for the Nigerian officials
as an example of a successful port privatization.

4. Sample also advocated creation of a mechanism to reduce
corruption in the maritime sector and to ensure that maritime
sector funding is applied judiciously.

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Meeting With Minister of Transport
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5. In the meeting with the Minister of Transport Chief Ojo
Maduekwe and other top Ministry officials, the fight against
corruption was reiterated. The Minister thanked the U.S
government for assisting in training officials of his
Ministry on anti-corruption, and asked for more of such
assistance.

6. The Minister explained his plans to visit Washington June
3-11 and asked for DOT assistance in scheduling appointments
with USG officials. Sample agreed to put together a program,
including a visit to some U.S. ports and a meeting with
Secretary Mineta. The Minister praised the efforts of the

SIPDIS
DOT in helping Nigeria's transportation sector, and asked for
continued cooperation between the GON and DOT.

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Meeting With Bureau of Public Enterprises (BPE)
--------------------------------------------- -

7. The DOT team also met officials of BPE, the GON
privatization agency. Sample explained DOT's current mission
in Nigeria and offered assistance in privatizing port
services. The port privatization team leader Hassan Usman,
stressed that privatization of port services is on course
using the "Landlord Port Model." Usman said BPE was hosting
workshops to sensitize state governments, labor and civil
society on port privatization, and reiterated BPE,s aim to
privatize the port services of one of Nigeria's eight ports
before the end of the year. Sample advised that labor should
be fully involved in the privatization process to ensure a
smooth transition. Usman agreed, commenting that this was
the goal of the workshops as was evident from the communiqu
adopted by stakeholders at one of the workshop sessions.
Sample also advised that port privatization should not be
rushed, but rather be a phased process.

8. The DOT technical team offered to assist the BPE in
training officials, and resolved to work closely with the BPE
to ensure a successful privatization of port services. Usman
welcomed DOT's offer of assistance.

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Comment
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9. The GON's resolve to privatize selected port services
was clearly evident throughout the visit to Abuja. However,
at the Lagos Port Complex the issue of privatization is so
sensitive that Nigerian Port Authority (NPA) managers refused
to discuss the topic in the presence of NPA junior staff. In
addition, the GON must surmount a number of other hurdles if
port services are to become more efficient and less corrupt.
Nigerian ports also have often been sites of violent labor
protests-- usually involving privately hired dock workers.
Several weeks before the DOT team's visit one such protest
sparked a disturbance at the Lagos Port, and reportedly
authorities are yet to put in place an effective system to
handle these volatile situations.

10. The issue of immediate concern to port managers is the
June 2001 policy of 100% inspection. This policy has
increased average clearance time from 20 to over 30 days, and
NPA officials claim 100% inspection "will only lead to
disaster." They point to increased stress on equipment
caused by repetitive repositioning of containers, and also
allege 100% inspection fuels corruption. NPA officials
explained that the more hands that come in contact with a
container the more opportunities for pilferage and bribery
(the more difficult the clearance process the more "dash"
required to smooth the way).

11. Port officials are searching for alleviation to 100%
inspection, but for now the GON appears intent on maintaining
this controversial policy. Meanwhile, the Lagos container
terminal is reportedly home to an estimated 1,000 abandoned
containers left over from the initial days of 100%
inspection. No one wants to step forward to claim spoiled
foodstuffs, or in certain cases -- illicit or undervalued
goods.

12. Many observers opine that if Nigeria is to become a
regional maritime hub, port services have to be delivered in
a more efficient way, corruption must be eradicated at the
ports, and labor unrest at the ports must be curtailed.

ANDREWS

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