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Cablegate: Nigeria: Pol/Econ Updates for February 1-14, 2008

VZCZCXRO2164
PP RUEHMA RUEHPA
DE RUEHUJA #0313/01 0510735
ZNR UUUUU ZZH
P 200735Z FEB 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 2104
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOS/AMCONSUL LAGOS 8747
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 05 ABUJA 000313

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR AF/W, INR/AA
ENERGY FOR CGAY AND GPERSON

E.O. 12958: N/A
TAGS: PGOV EPET PHUM EFIN ETRD KCOR KDEM ELAB MOPS
NI
SUBJECT: NIGERIA: POL/ECON UPDATES FOR FEBRUARY 1-14, 2008

REF: 07 LAGOS 749

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

1. (U) Following is a joint Embassy Abuja-ConGen Lagos
compilation of February 1-14, 2008 political/economic
highlights, which did not feature in our other reporting,
covering:
-- Elections: Tribunals, Reforms, Party Politics
-- Corruption
-- Niger Delta
-- Military Affairs
-- National Assembly
-- Human Rights, Labor, TIP
-- Economic News
-- Oil and Gas

---------------------------------------------
ELECTIONS: TRIBUNALS, REFORMS, PARTY POLITICS
---------------------------------------------
2. (U) The Benue State Election Tribunal heard closing
arguments February 10 in the petition against Senate
President David Mark (PDP) by Usman Abubakar (All Nigeria
People,s Party, ANPP). The court will announce the verdict
date via hearing notice posted outside chambers. Lawyers
expect a final judgment in the case by the end of February,
at the earliest. Also in the same court session, the
Tribunal struck out Mark,s application alleging Abubakar had
"tampered" with evidence already remitted to court.

3. (SBU) In the lead up to the March 8 PDP national
convention, the PDP will hold several congresses to elect
party officials at the ward (February 21), local government
(February 25), state (February 28), and zonal (March 4)
levels. On February 6, the PDP caucus in the House of
Representatives, led by National Assembly member Farouk
Lawan, alleged PDP Chair Ahmadu Ali and the National
Executive Committee of the party were employing
"undemocratic" means and making decisions, including the
lists of congress and convention committee members, without
consultation with other party members. (Comment: A PDP
activist told PolOff February 14 that he expects the PDP
convention date to again be postponed due to ongoing
controversy over the set-up of the convention committee,
which allegedly has not followed the party's internal rules.
The convention committee is important because it will set the
playing field - level or not - for election of the new party
chairman and other top officeholders. End Comment.)

4. (U) Several outstanding ambassadorial postings are set to
be announced, according to press reports February 4. Retired
Brigadier-General Oluwole Rotimi, former military governor of
Western Province (all of what is now called the Southwest
Zone) under Gowon, is expected to be announced as Ambassador
to the U.S.; PDP Chair Ahmadu Ali, originally slated for the
U.K., is expected to be confirmed as High Commissioner to
South Africa. Also, physician Dalhatu Tafida may be announced
High Commissioner to the U.K.; former Foreign Minister Joy
Ogwu, who has advised the United Nations on disarmament
issues and advocated closer Africa-Latin America relations,
may be Ambassador to the UN; and former deputy governor of
Katsina state, under President Yar,Adua, Garba Aminichi, may
be announced Ambassador to Saudi Arabia.

5. (U) Nigerian press report February 1 former president
Obasanjo "packed important documents relating to his tenure"
and carted them away when he vacated office in 2007.
Documents, including the Independent National Electoral
Commission (INEC) registration certificate issued to the PDP
are alleged to have gone missing.

6. (SBU) A traditional local ruler told PolOffs a by-election
in Oyo State to replace assassinated House Representative
Olusegun Oladimeji showed the continued electoral problems
faced by the country. Voter intimidation and violence kept
many people away from the polls.

ABUJA 00000313 002 OF 005

7. (SBU) On January 29, the Supreme Court dismissed a suit
filed by former Governor of Anambra State Andy Uba, asking
the court to reverse its judgment that upheld a lower courts
annulment of his election. The Court described the appeal as
a "waste of time" and a "mockery of the judiciary." A
journalist in Anambra's capital Awka, told PolSpec the
Supreme Court judgment was warmly received by the public, and
said several groups had visited Governor Peter Obi to
congratulate him on the ruling. Neither Uba nor any
opposition group has criticized the ruling and there were no
violent protests.

----------
CORRUPTION
----------
8. (U) Former Delta governor James Ibori (PDP, 1999-2007),
currently under investigation from the EFCC for allegedly
stealing more than $80 million in public funds, was granted
bail by a Kaduna High Court February 11. Ibori posted bail
at $40,000, and was ordered to remain in Kaduna and surrender
his tourist and diplomatic passports. His trial is scheduled
to begin February 18.

9. (U) On February 11, an Enugu High Court granted bail to
former Edo governor Lucky Igbinedion (PDP, 1999-2007), who is
accused of 147 counts of corruption and money laundering,
including allegations that he misappropriated $200 million
from state coffers while in office. The court placed several
conditions on Igbinedion,s bail, including ordering him to
deposit his passport with the EFCC, restricting any
international travel for himself and his two sureties (who
must currently be federal permanent secretaries), and
mandatory biweekly reporting to the EFCC. As of February 14,
Igbinedion remained in EFCC custody in Enugu because he could
not produce the requisite two sureties. Igbinedion,s trial
is set to commence February 25.

-----------
NIGER DELTA
-----------
10. (SBU) On February 1 a naval patrol team intercepted
militants around the Cawthorne Channel, Rivers State. The
militants were reportedly repulsed following a brief
gunfight, according to security sources. No navy casualties
were reported. The naval team captured one boat with an
engine and three AK47s; the boat and rifles are now in
government custody.

11. (SBU) Men dressed in military uniforms in three boats
attacked a mobile police team attached to Shell operations at
Cawthorne Channel, Rivers State on February 4, said security
sources. The mobile police were apparently coming from Port
Harcourt for a crew change when they were attacked; one
policeman was reported dead, two injured.

12. (U) Rivers State Governor Rotimi Amaechi (PDP) presented
the Fiscal Responsibility Bill to the Rivers State Assembly.
The proposed law would clamp down on nepotism and favoritism
in the awarding of contracts by stripping the Governor's
office of its discretionary powers to award contracts. The
Governor also proposed a bill that would compel the state to
save 1 billion naira ($8.5 million) monthly to protect state
finances from fluctuating oil prices.

-----------------
NATIONAL ASSEMBLY
-----------------
13. (U) On February 12, the National Assembly passed the
2008 Appropriation Bill; however the Senate and House of
Representatives each presented different figures. The Senate
passed a budget in the amount of $24 billion (2.898 trillion
naira), while the House passed a $25 billion (2.945 trillion
naira) budget; both of which were higher than the $20 billion
(2.4 trillion naira) proposed by President Yar'Adua. In
anticipation of these differences, the two chambers
constituted a Conference Committee comprised of key members

ABUJA 00000313 003 OF 005


from both the House and Senate to harmonize the disparity
before the bill is presented to the President. Newspaper
reports February 14 indicated that President Yar'Adua was
considering a veto of the Appropriation Bill out of concern
that the Assembly is on a "spending spree" which could cause
inflation.

14. (U) The National Assembly's Joint Committee on
Appropriation, Finance, Aid, Loans and Debt Management on
February 13 approved President Yar'Adua's debt write-off
proposal for Liberia. The debt relief is part of a broader
initiative by the international community to clear Liberian
debt. The bill now passes to the full House of
Representatives for approval.

---------------
MILITARY AFFAIRS
---------------
15. (SBU) The fallout of the theft of arms from the Kaduna
armory has begun. As a court martial sits this week to try
the officers allegedly involved in the sales of hundreds and
possibly thousands of small arms to Niger Delta militants,
the Army Council has demanded the resignation of an
unidentified Major General for his shoddy initial
investigation of the affair.

16. (U) The GON announced the review and likely cancellation
of hundreds of millions of dollars worth of defense projects,
some of which have been in the pipeline for years.
Reportedly included in the review are a $250 million purchase
of F-7 fighter jets from China and the renovation of the
Naval Ordnance Depot.

----------------------
HUMAN RIGHTS, LABOR, TIP
----------------------
17. (U) On February 14, the Judiciary Staff Union of Nigeria
(JUSUN) called off its 10-day nation-wide strike following a
meeting between Labor Minister Hassan Lawal and former
Nigerian Labor Congress president Adams Oshiomhole.
Negotiations between the government and JUSUN will commence
February 19. On February 11, Supreme Court staff had joined
their colleagues in protest, resulting in a February 12
statement by the GON threatening to fire any staff that
joined the strike. (Note: The JUSUN had been protesting the
non-implementation of a recommended pay raise and demanding a
uniform salary structure for all judicial staff nation-wide.
According to JUSUN President, a 2006 Presidential Commission
on the Reform of Justice Sectors recommended a pay raise for
judicial workers, members of the Nigerian Police Force, and
the Nigeria Prison Service; but judicial workers are the only
ones who have not received the increase to date. On the
contrary, Supreme Court Chief Registrar Usman Musale declared
the workers demands unrealistic and stated that only an
amendment to the 1999 Constitution would enable the
implementation of a uniform salary structure. The National
Judicial Council is only responsible for paying salaries of
judges and Chief Registrars, while all support staff salaries
are to be paid the individual State Judicial Service
Commissions, ultimately making the state Governors
responsible for the dispersal of funds and salaries. End
Note.)

18. (U) On February 9, police intercepted a suspected human
trafficker in the Birni Gwari area of Kaduna State with 24
female children aged 10-13 years allegedly being trafficked
from Tsaragi in Kwara State to Kano. According to Kaduna
State Commissioner of Police, Haz Iwendi, the suspect
confessed to transporting the children, but said he had
permission from the parents to take the children for domestic
service. The suspect also said that he previously took his
eight sisters to Kano to work as maids and that they made
good money, prompting the others to want to go as well.

19. (U) On February 7, 105 teenagers were rescued from human
traffickers. Police spokesperson of the Federal Capital
Territory (FCT) command, Superintendent Ahmed Musa, said the

ABUJA 00000313 004 OF 005


children were trafficked from Nassarawa, Lagos, Kano, Kwara,
and some villages within the FCT to be used for sexual
exploitation and forced labor. According to Musa, 22
suspects arrested are currently at Suleja prison awaiting
their arraignment before an Abuja High Court.

-------------
ECONOMIC NEWS
-------------
20. (U) The Governor of the Central Bank of Nigeria (CBN),
Chukwuma Soludo, is considering having United Bank of Africa
(UBA), subsidiary of UBA Capital (Europe), manage Nigeria's
large and rising foreign exchange reserves, more than $54
billion. If this happens it would mean a major shift in
policy by the CBN, which had in the past insisted that local
banks interested in participating in the management of the
country's lucrative foreign liquid assets join forces with
reputable international financial institutions to be able to
do so. This policy shift is still in the early stage and
decision would require approval of the CBN board.

21. (U) Lagos State inaugurated a new litigation system
designed to fast track resolution of commercial disputes.
The system is designed to resolve disputes in eight months
from the date the case is filed. A suit will qualify for the
fast track system if the claim is for 100 million naira
($850,000) or more, if one or more of the parties is a
non-resident investor, if the suit involves a mortgage, or if
the claimant request the fast track process.

22. (SBU) PolOff met with Oge Egede, an official with the
Kick Against Indiscipline (KAI) brigade. KAI is an
environmental enforcement agency established in 2003 by Lagos
state government. Members of the brigade, who wear
distinctive green uniforms, are charged with enforcing
environmental laws, eliminating illegal street trading,
regulating private waste disposal companies and stopping
indiscriminate littering. He described the work as sorely
needed to counteract the degradation of public space in
Lagos. According to Egede, violators are taken to mobile
courts located at the police stations for summary payment.
He regretted that the public misunderstands the work his
brigade undertakes, and blames this on poor media outreach.
Several weeks before this meeting, a post officer watched as
a dozen KAI "officers" armed with batons descended from their
bright green truck and attacked a plant seller's stand,
tearing down signs and knocking over merchandise before
leaving. Although his was one of many roadside stalls in the
vicinity, the plant vendor was the only target of the KAI
team. He remains in business in the same location.

23. (U) Magnus Kpakol, National Coordinator for the GON's
National Poverty Eradication Programme (NAPEP), said the
involvement of traditional rulers in Ogun State has helped
link cassava processors to target markets, significantly
lowering the poverty rate in rural areas of the state. NAPEP
is promoting its new Village Economic Development Solutions
Scheme (VEDSS) to develop rural economies. According to
Kpakol, VEDSS proposes that every village have at least one
anchor economic activity, likely agro-based. Villages are
expected to have a trust fund that can be used for communal
and infrastructure development.
------------
OIL AND GAS
------------
24. (U) The Warri refinery returned to operation in early
February. Warri has a nameplate capacity of 125,000 barrels
per day, but is expected to initially run at 60 percent
capacity. The return of Warri is welcome news for Nigeria,
but the country will remain dependent on imported refined
products. The Kaduna refinery will remain off-line for
maintenance until August 2008.

25. (U) Flights across the country were canceled on February
7 due to a nationwide shortage of jet fuel. Nigeria imports
all its jet fuel, but the immediate cause of the shortage was
unclear. Some reports indicate that fuel distributed by

ABUJA 00000313 005 OF 005


African Petroleum was out of specification and could not be
used by airlines.

26. (U) According to government figures the GON spent $3.8
billion in fuel subsidies in 2007. According to a local
business daily, the GON is already discussing with labor
unions a gasoline price increase in June 2008. Publicly at
least, the Nigerian Labor Congress has come out against any
such move. Labor-union led strikes in June 2007 forced the
GON to reduce a planned price hike.

27. (SBU) President Yar'Adua announced a new natural gas
pricing policy that favors gas for electricity production and
heavy domestic industries over gas destined for export.
International oil companies complain that the new policy is
based on wildly optimistic domestic demand assumptions and
unrealistically low gas production costs. They claim it will
hinder the overall development of Nigeria's largely untapped
gas reserves and sets theoretical domestic demand against
actual export projects already in the works. There was no
announced date for the policy's implementation although
controlling legislation will likely be required.

28. (SBU) Shell Petroleum Development Corporation's (SPDC's)
proposed restructuring continues to generate controversy
(reftel). The company's managing director testified about
proposed layoffs at a public hearing of the House Committee
on Upstream Petroleum on February 11th. Committee
representatives accused Shell of favoring expatriates over
Nigerians. On February 12th, Nigerian National Petroleum
Corporation (NNPC) ordered Shell to halt the restructuring.
SPDC is a joint venture company with the GON holding 55
percent of the company through a subsidiary of NNPC. Shell
has announced that, as part of its "One Shell" concept, it
would layoff between three and six thousand employees and
combine parts of SPDC and Shell Nigeria Exploration and
Production Company (SNEPCO), its offshore arm. Company
contacts report Shell has already eliminated one layer of
senior management, with Shell's Vice President Ann Pickard
taking a more active role in operations.

29. (SBU) Press accounts say that President Yar'Adua
discussed the restructuring with Royal Dutch Shell's CEO
during the World Economic Forum in Davos. The GON is likely
concerned not only with employment, but also with the impact
combining SPDC and SNEPCO will have on Nigeria's joint
venture operations. Shell may use the restructuring as a
bargaining tool to win concessions from the GON on joint
venture arrears, disputed oil blocks, and gas flaring
deadlines. SPDC is widely regarded as bloated and
inefficient by local industry executives and one company
contact reports that SPDC is losing money for Shell. A local
Chevron Vice President told Ambassador February 18 that Shell
is working on managing its restructuring and problems with
the GON by seeking a loan in the amount of $1 billion that
will be used to offset some of the problems caused by the
proposed restructuring.
SANDERS

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