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Cablegate: Nigeria: Af Das Moss' Meeting with Transport Minister

VZCZCXRO3194
PP RUEHMA RUEHPA
DE RUEHUJA #0411/01 0631256
ZNR UUUUU ZZH
P 031256Z MAR 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 2241
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 8860
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC

UNCLAS SECTION 01 OF 02 ABUJA 000411

SIPDIS

SENSITIVE

SIPDIS

DEPARTMENT PASS TO USTR (AGAMA)

E.O. 12598: N/A
TAGS: ELTN EAIR ECON EAID ASEC ETRD NI
SUBJECT: NIGERIA: AF DAS MOSS' MEETING WITH TRANSPORT MINISTER

SENSITIVE BUT UNCLASSIFIED--CONTAINS COMPANY PROPRIETARY
INFORMATION

1. (SBU) SUMMARY. Nigeria's roads and railways are in disrepair,
creating a logjam for transport and commerce. The Transport
Ministry will be looking to public private partnerships to improve
mass transit and is developing related legislation. There are
significant opportunities for U.S. services and equipment. The
Ministry is looking at Build-Operation-Transfer (BOT) models on 25
to 30 year contracts. The Minister wants all projects - roads,
airports, rail and ports - structured so investors have a chance to
make a profit and the impact on the end user is bearable. The
Minister said she had made a decision in principle to allow World
Airways to bid for cargo contracts. End Summary.

2. (SBU) Ambassador Sanders, AF DAS Todd Moss and Econoffs met with
Minister of Transportation Ms. Diezani K. Allison-Madueke on January
24. The Minister said that the current condition of the road
network is unacceptable especially in terms of safety. It raises
operating costs to the road users who are paying much more in higher
fuel consumption, higher vehicle maintenance, higher depreciation,
greater travel time and increased accident costs for traveling on
bad roads. The economy bears the double burden of high road
maintenance costs on the one hand, and rising road user costs on the
other. Allison-Madueke said that long neglect of the rail and water
transport sub-sectors meant that roads have been forced to carry
over 90 percent of the traffic of goods and people. The resulting
high impact on the roads has led to their dilapidation and
degradation which has in turn placed high financial demands on
public sector funding. The Minister stated that with the
establishment of the Federal Roads Maintenance Agency (FERMA) and
higher levels of funding for maintenance, there has been a relative
improvement in the level of road maintenance, but not yet in a
sustainable manner.

3. (SBU) The Minister noted that road construction and
rehabilitation is capital intensive. The Government's current
policy is to shift from public funding of road projects, to
partnership with the private sector under Public Private
Partnerships (PPP). She said that the establishment of the necessary
legal, regulatory and institutional framework for PPPs is moving
forward for both roads and rail. The Ministry is also preparing
some highways for rehabilitation and modernization under Design,
Build, Operate and Transfer (DBOT/BOT) schemes and, in accordance
with 2008 Budget guidelines, has already advertised for expressions
of interest by companies. The Minister emphasized that she urges the
private sector, including Nigerian Banks, to participate in
Nigeria's national road development.

4. (SBU) The Minister also said that the Federal Government has
recorded successes and lessons learned on the PPP Scheme with
Airports and Seaports. The recent opening of the local wing of the
Murtala Mohammed Airport built under BOT and ports concessioning,
provide good examples.

---------
RAILROADS
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5. (SBU) The Minister noted that senior officials from General
Electric had met with the President and then with the Ministers for
gas, power, and transport for exchanges on how GE might assist these
sectors. GE already provides gas turbines for electricity
generation and engines for locomotives and airplanes and seemed a
natural partner for the GON going forward. Although an agreement is
in place for Chinese construction of new rail lines, GON and Chinese
representatives are discussing how to move forward. The GON has
been receiving technical advice on rail from a U.S. consulting firm.
The Minister is aware of U.S. company interest in rehabilitation of
existing rail lines.

6. (SBU) DAS Moss asked the Minister about timelines to build or
rehabilitate the rail system. One scenario is to fast track freight
by not changing from narrow rail gauge to standard gauge, but
refurbishing existing narrow gauge lines. The almost moribund
narrow gauge system, according to the Minister, could be
rehabilitated from the current operating speed of 20 km per hour to
60 to 65 km per hour within three years. The Minister mentioned
that passenger rail is a challenge because it will require subsidies
and it is unclear where the money would come from on a sustainable
basis. The Minister looks to complete the build out and
rehabilitation of the rail system in six years. She said the
Chinese could not/not meet that timetable at present as they want to
build whole new lines from scratch. The GON will look for foreign
expertise as Nigeria's plans move forward.

ABUJA 00000411 002.3 OF 002

7. (SBU) THE MINISTER REPORTED THAT SHE HAD PREPARED A LETTER TO
INFORM THE USG OF APPROVAL FOR WORLD AIRWAYS TO BID FOR CARGO
FLIGHTS. THE LETTER WAS ONLY AWAITING THE CONCURRENCE OF THE
MINISTER OF STATE FOR AVIATION. (NOTE: EMBASSY HAD NOT RECEIVED THE
NOTIFICATION LETTER AT TIME OF TRANSMITTAL OF THIS MESSAGE. END
NOTE).

SANDERS

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