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Cablegate: Nigeria: Biweekly Pol/Econ Updates for Mar 17-31,

VZCZCXRO3619
PP RUEHMA RUEHPA
DE RUEHUJA #0624/01 0951340
ZNR UUUUU ZZH
P 041340Z APR 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 2520
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOS/AMCONSUL LAGOS 9021
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 05 ABUJA 000624

SIPDIS

SIPDIS
SENSITIVE

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

E.O. 12958: N/A
TAGS: PGOV PHUM ECON EPET ETRD KJUS MASS ELBR KDEM
PINR, NI
SUBJECT: NIGERIA: BIWEEKLY POL/ECON UPDATES FOR MAR 17-31,
2008

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

1. (U) Following is a joint Embassy Abuja-ConGen Lagos
compilation of March 17-31, 2008 political/economic
highlights, which did not feature in our other reporting,
covering:
-- Election Tribunals
-- PDP Politics
-- Niger Delta
-- National Assembly
-- Labor
-- Economic News
-- Military Affairs
-- Oil and Gas

------------------
ELECTION TRIBUNALS
------------------
2. (U) KEBBI: Reports surfaced March 27 alleging a "former"
Chief Justice has been interfering in the proceedings at the
Kaduna Court of Appeals, which is set to rule on whether to
uphold the Kebbi State Election Tribunal decision to quash
the April 2007 election of Usman Dakin-Gari (People's
Democratic Party, PDP) as governor. Counsel to the
Independent National Electoral Commission (INEC) dismissed
the allegations as baseless; however, opposition politicians
from the All Nigeria People's Party (ANPP), among others,
maintain that the appeal court's unwillingness to set a date
for final judgment one month after closing arguments were
heard suggests that the appeals court may be compromised.

3. (U) EDO: On March 20, the Edo State Election Tribunal
overturned the election of Governor Oserheimen Osunbor (PDP)
in favor of former president of the Nigerian Labor Congress
Adams Oshiomhole (Action Congress, AC). According to press
reports, the court ruled in Oshiomhole's favor because he
received more legitimate votes than did Osunbor. A Lagos
contact present during the six-hour ruling told PolOff March
25 that the number of legitimate votes was determined by
subtracting fraudulent and "invalid" ballots (neither signed
nor stamped by polling officials) from figures provided by
INEC. Media sources report over 260,000 PDP and 30,000 AC
votes were invalidated. Osunbor has said he will appeal the
ruling. In the interim, the AC and Labor Party (LP) have
begun preliminary discussions on setting up a new government.

4. (U) OGUN: A Court of Appeals overruled the decision by the
Ogun State Election Tribunal to dismiss the petition of
gubernatorial aspirant Ibukunle Amosun (ANPP). Arrangements
for a new trial are under way.

5. (U) ONDO: The Ondo State Election Tribunal ruled that some
ballot papers be recounted. Olusegun Mimiko (LP) had
contested results in four local government areas, requesting
a recount of the ballots he claimed had been arbitrarily
awarded to incumbent governor Olesugon Agagu (PDP). Agagu
objected to the motion, claiming that the ballots could have
been tampered with since the election, but the Tribunal
permitted a recount.

6. (U) OSUN: The Osun State Election Tribunal allowed video
evidence of alleged vote rigging but denied the motion of
gubernatorial aspirant Rauf Aregbesola (AC) to allow a
forensic expert to testify on voting irregularities based on
fingerprint analysis.

7. (U) OYO: On March 20, a split decision by the tribunal
judges in Oyo State affirmed the election of Governor
Alao-Akala (PDP). While deducting 93,000 votes from the ANPP
and PDP candidates for irregularities, the Tribunal ruled
that this did not change the fact that Governor Akala still
received a majority of the votes with a geographical spread
of at least one quarter of votes cast in two thirds of Oyo,s
local government areas.


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------------
PDP POLITICS
------------
8. (U) The PDP National Working Committee met March 18 and
resolved to implement the recommendations of the Ekwueme
Reconciliation Panel, particularly the welcoming back of G-34
party founders pushed out during the Obasanjo era, and
reconsideration of the Board of Trustees chairmanship.
National Chair Vincent Ogbulafor dissolved the Governing
Board of the People's Democratic Institute chaired by Bode
George, which was reconstituted only six weeks ago by
outgoing party chair Ahmadu Ali.

9. (U) Former Finance Minister and PDP founding member Adamu
Ciroma rebuffed an invitation to rejoin the party's Board of
Trustees (BOT) in protest over Obasanjo continuing as BOT
Chair. Aggrieved members of the PDP, led by anti-Obasanjo
forces within the so-called G-21, requested that Ogbulafor
convene a special convention to amend the PDP's constitution
with respect to BOT chairmanship provisions.

-----------
NIGER DELTA
-----------
10. (SBU) On March 24, the Nigerian Army's Joint Task Force
(JTF) engaged two speed boats carrying 12 militants in
Okrika, Rivers state. The Overseas Security Advisory Council
(OSAC) claimed that four militants were killed and the JTF
managed to intercept a barge carrying stolen diesel fuel.

11. (SBU) On March 21, a fire caused an explosion on a navy
ship near Port Harcourt, Rivers state. Two naval officers
died during this incident. The Movement for the Emancipation
of the Niger Delta (MEND) claimed responsibility for this
attack, a claim OSAC sources dispute.

12. (SBU) OSAC sources confirmed to the Lagos RSO that the
JTF conducted operations in Warri, Delta state on March 19 to
search and recover weapons munitions. On March 20, a civil
society contact told Lagos PolOff that the JTF was raiding
homes in a predominantly Itsekiri neighborhood in search of
weapons. This contact speculated an increase in weapons
could be attributed either to upcoming local government
elections or to the anticipated crowning of an Urhobo King
whom the Itsekiri do not recognize as their paramount ruler.

13. (U) According to Nigerian press reports, a barge owned by
the German firm Julius Burger and five Nigerian crew members
were released March 17 after being held captive for five days
in Rivers state. Press reports claim no ransom was paid for
their release and no information on the perpetrators was
provided.

14. (U) The trial of Delta militant Henry Okah began April 4
in Jos, Plateau state. Some press reports claimed that other
Delta militants, possibly including released militant Dokubo
Asari, have been enlisted as witnesses for the prosecution in
exchange for huge cash payments.

15. (U) The President of the Movement for the Survival of the
Ogoni People (MOSOP), Ledum Mitee, issued a letter to the
Niger Delta Development Commission (NDDC) in Rivers State to
express the Ogoni people's displeasure with the NDDC's 2008
project budget in Rivers State. The letter accuses the state
NDDC office of providing Ogoni local government areas the
fewest number of projects with the least monetary value, and
offers the NDDC a draft of the Ogoni Development Master Plan
should the NDDC wish to identify the project priorities of
the Ogoni.

-----------------
NATIONAL ASSEMBLY
-----------------
16. (U) The Senate announced it will begin reviewing and
making amendments to the 1999 Constitution. Majority Leader
Teslim Folarin said the number of amendments may be limited

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to 12, including such contentious issues as state creation,
derivation, and immunity for governors and the President.
Folarin attributed the failure of the 2006 amendment process
to the attempt to address too many issues concurrently.

17. (SBU) On March 25, the Governors' Forum announced that
six, and possibly more, states of the Nigerian federation
have begun the process of enacting Fiscal Responsibility and
Public Procurement Acts in line with Abuja's directive to
ensure accountability and transparency at the state-level.
The Acts are geared toward combatting corruption, and are
modeled after similar legislation pending at the National
Assembly. The legislation has to pass through each state
assembly before it is considered law in that state. State
governments, which may derive significant revenue from the
Federation Account, often lack the capacity, technical
prowess, and political will to ensure that funds are properly
and usefully managed and allocated. A dearth of reliable
infrastructure, access to water, and lack of
revenue-generating industries and plans have impaired the
economic growth of many states, and made several reliant
solely on federal funds to carry out state projects.

-----
LABOR
-----
18. (U) During a dinner attended by Lagos PolOff, Peter
Esele, President of the Petroleum and Natural Gas Senior
Sector Association of Nigeria (PENGASSAN), warned oil
companies and the media that PENGASSAN would conduct a
nationwide strike if Mobil Oil Nigeria did not negotiate the
proposed firing of approximately 100 workers (including
branch executive officers and the national treasurer of the
union). Since this announcement, the Federal Ministry of
Labor and Productivity have been in negotiations with
PENGASSAN and Mobil Oil.

19. (SBU) A senior executive at an international oil company
told Lagos EconOff that a strike by truck drivers against
Texaco Nigeria has ended. The unrest, which had been going
on since mid-January was started after Texaco fired a truck
contractor for violating safety rules. The executive claimed
that Texaco made no concessions and the contractor was not
re-hired as demanded by the union.

-------------
ECONOMIC NEWS
-------------
20. (U) Cost of Doing Business in Nigeria: In its Survey
Report for March 2008, the International Monetary Fund (IMF)
reported that Nigeria,s private sector pays seven times more
for power, compared to its global competitors. The cost of
doing business in Nigeria has considerably increased due to
limited power supply and high transportation costs.
According to the IMF, the dilapidated state of the country,s
infrastructure is the main impediment to growth. The report
contended that the private sector should ultimately be the
driver of growth, employment creation, and poverty reduction
in Nigeria.

21. (U) Development Credit Authority Program: Ambassador and
USAID Mission Director signed a Memorandum of Understanding
with two Nigerian banks, Bank PHB and Skye Bank on March 17,
as part of a partnership agreement to implement Development
Credit Authority (DCA) programs in Nigeria worth $11 million.
The DCA allows the USG to issue partial loan guarantees to
small and medium enterprises to pursue agricultural
development goals.

22. (U) Hunger Problems: Minister of Agriculture and Water
Resources reported that over 65% of Nigerians lack sufficient
access to the amount and variety of food required for healthy
living because food supplies don,t meet demand. This
situation leaves Nigeria highly vulnerable to famine and
increases poverty. The Minister reported that some of the
factors hampering food supply were weak agricultural

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services, overdependence on rain-fed agriculture, general
market failure, poor rural road network and inadequate
storage facilities.

23. (U) NCC Thank You: In a March 18 meeting with Nigerian
Copyright Commission (NCC) staff and the Embassy, Director
General Adewopo thanked the USG for the continued support for
building capacity within his agency. Through the Global
Intellectual Property Academy in Virginia, the USG has
supported training for more than 10 NCC staffers in the last
12 months. Adewopo acknowledged the positive effects the
training has had on his agency and looks forward to working
with the USG on upcoming July training in Lagos supported by
the Department.

24. (U) Lekki Free Trade Zone: Lagos EconOffs visited the
Lekki Free Trade Zone (FTZ), under construction by an
engineering firm based in Nanjing, China. The on-site
supervisor told EconOffs that Lagos Governor Fashola has
asked that a portion of Phase 1 be completed by May 29, to
allow for a formal opening of the project. Construction of
factory buildings from imported materials, will begin in
June, the on-site supervisor said. According to the
supervisor, an Italian food processing firm and two local oil
companies, among others, have expressed interest in
establishing within the FTZ.

25. (SBU) Airport Work Stalled: Work on the Akwa Ibom Airport
has again been suspended because of the state government's
failure to pay, says US company DynCorp, the primary
contractor building the airport. Company contacts told Lagos
PolOff that government checks delivered to DynCorp's office
came with instructions to not immediately deposit them.
While the company has stopped operations, subcontractors
continue to work at Governor Akpabio's insistence. The Akwa
Ibom Finance Commissioner told DynCorp April 3 that the state
will remedy the payment shortfall. DynCorp has said that if
the situation is not resolved by April 10, it will terminate
the contract.

26. (U) Economics of Nigeria's OIC Membership: Nigerian press
reported March 31 that Nigeria assented to membership in the
Organization of the Islamic Conference (OIC) for economic
gain. Umar Ahmad, an official of the national Islamic body
Jama'atu Nasril Islam, which is headed by the Sultan of
Sokoto, claimed former president Obasanjo actively and
publicly sought Nigeria's admission into the OIC (despite the
fact that Nigeria joined in 1986 under former head of state
Ibrahim Babangida). Ahmad claimed that Obasanjo saw enormous
potential for economic development and investment for Nigeria
should it accede to full OIC member status. (Note: President
Yar'Adua was the first Nigerian head of state to attend an
OIC Islamic Summit, having been there for the one recently
held in Dakar March 12-14. Press coverage of Yar'Adua's trip
generally has been positive. End Note.)

27. (U) IDB to Help Launch Nigeria's First Islamic Bank: On
March 31, the Islamic Development Bank (IDB), the development
arm of the OIC Finance Committee pledged to give $21 million
to aid Ja'iz International Bank to begin operations in
Nigeria. In addition to the pledged funds, the IDB will also
aid in technical capacity building, trade, finance, and
credit lines.

----------------
MILITARY AFFAIRS
----------------
28. (U) President Yar,Adua has approved an increase in the
allowances of Nigerian troops on peacekeeping missions, from
$600 to $1028. The increase is aimed at helping improve
troop welfare and morale, and was pushed for by Chief of Army
Staff General Luka Yusuf.

-----------
OIL AND GAS
-----------

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29. (U) On March 30, five employees of local oil firm Express
Gas and Oil Limited were kidnapped off the coast of Ondo
State. According to press reports, the kidnappers were youth
from communities near the company's fields. Under a court
injunction to halt suspected graft, Express Oil had stopped
funding community development projects through local
associations and community leaders. The hostages were freed
March 31.

30. (U) Aviation Jet-A fuel shortages returned March 26.
Flights across the country were delayed or cancelled as
airlines scrambled to find adequate supplies. A previous
shortage was blamed on fuel that did not meet specifications.
The cause for this most recent shortage remains unclear.

31. (SBU) A contact at a downstream European oil company told
Lagos EconOff that he believes operations at Nigeria's two
working refineries are not sustainable and the refineries had
been rushed into operation to ease political pressure on
Nigerian National Petroleum Corporation Acting Group Managing
Director Abubakar Yar'Adua. The refineries returned to
service earlier this year although they are reported to be
working at only 60% capacity. According to the contact, turn
around maintenance was not performed on the refineries before
they restarted and he expects them to be out of service again
some time this summer.
SANDERS

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