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Cablegate: Nigeria: Bi-Weekly Pol/Econ Updates for May 16-31,

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TAGS: PGOV KDEM ECON EPET ETRD KCOR MOPS NI
SUBJECT: NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR MAY 16-31,
2008

1. (U) Following is a joint Embassy Abuja ConGen Lagos
compilation of May 16-31, 2008 political/economic highlights,
which did not feature in our other reporting, covering:
--Elections
--National Assembly
--Military Matters
--Environment
--Energy
--Aviation
--Debt
--Fiscal Responsibility
--Agriculture
--Oil and Gas
--Other Important Issues


Elections
-----------
2. (U) Governors Timipre Sylva (PDP, Bayelsa) and Aliyu
Wamakko (PDP, Sokoto) won their gubernatorial by-elections on
May 24 and were restored to office. Both men had governed
their respective states since May 2007, but had their first
elections overturned at tribunal and were forced to contest
again in fresh polls. Incumbents from the ruling PDP have
now won all of the four gubernatorial by-elections held so
far (Kogi, Adamawa, Sokoto, Bayelsa). There is much
speculation about whether Sylva and Wamakko,s initial
tribunal defeat may oddly result in their tenure extension.
Some commentators contend they are each now entitled to a
fresh four-year term beginning in May 2008, based on the
precedent set by the Supreme Court in 2007 in the case of
Governor Peter Obi (Anambra).

National Assembly
------------------
3. (U) The Senate Committee on Drugs, Narcotics and
Anti-Corruption, in announcing its finding on June 3 that
Farida Waziri did not assume office at the EFCC prior to
Senate confirmation, freed the Committee to now focus on her
actual confirmation hearing, which began June 4. In her
first day of Senate hearings, Waziri vowed to end the
political manipulation of the EFCC, saying there would be "no
sacred cows." Waziri denied claims she stood surety for
former Benue Governor George Akume at the EFCC. She also
indicated she would propose an amendment to the EFCC law that
would prosecute foreigners found to be participating in
advance fee fraud scams purporting to require assistance to
remove funds from Nigeria (launder money), even when they
fall victims to it. According to Waziri, "we don't believe
they are victims because they know what they were doing."
She praised former EFCC Chairman Malam Nuhu Ribadu, noting
the solid foundation he established and upon which she plans
to build.

4. (U) Freedom Of Information (FOI) passes the Senate, but
not the House: Poloffs attended a June 2 hearing by the
Senate Committee on Media and Information on the FOI bill, at
which organized labor, the military and Senate President
David Mark (albeit with reservation) endorsed its passage.
During the hearing, the Federal Minister of Information and
Communications, Mr. John Odey assured all assembled that
President Yar,Adua would sign the bill (originally proposed
nine years ago), as soon as the National Assembly passed it,
to further the rule of law. Senator Mark expressed
reservations about potential misuse of the FOI law,
suggesting that libel should be made a criminal offense, not
simply a civil matter, but nevertheless pledged to pass it.
Confidentiality of sources for journalists is one area of
concern, with Mark suggesting that journalists should be made
to disclose all sources if necessary to prove the veracity of
their stories. Separately, Nigerian Labor Congress leader
Olaitan Oyerinde insisted that asset declaration forms
required by law of public officers (which are now submitted
to the Code of Conduct Bureau but kept private) should be
available to the public. The FOI legislation continues to
face setbacks in the House of Representatives. On June 4,
the House again rejected, for the fourth time in less than

ABUJA 00001095 002 OF 006


two months, consideration of its committee report on the FOI
bill, despite pledges by Speaker Bankole to pass it.

5. (U) The House of Representatives has said that separating
the offices of the Attorney General of the Federation and the
Minister of Justice (currently merged and held by Michael
Aondoakaa) and establishing an Independent Investigator's
Office will be one of the body's priorities during the
upcoming constitutional review exercise. The Chairman of the
House Committee on the Judiciary, Malam Bala Ibn Na'Allah,
said the continued amalgamation of the two offices was not
only responsible for the slow adjudication of justice in the
country but that it also "gives unfettered power to do and
undo to the AG / Minister of Justice."

6. (SBU) Senator Saminu Turaki (PDP, Jigawa) told the media
in late May that he favors changing Nigeria's presidential
term of office from four to seven years (including an
immediate extension of Yar,Adua,s tenure to seven years),
while establishing an overall limit of two terms (14 years in
office total). Turaki explained that longer presidential
tenure would &allow Nigerians to really benefit from a
particular government,8 and ensure follow through on
development programs. His view has not been well received by
colleagues in either the Senate or the ruling party. Senator
Eze (PDP, Enugu) called Turaki's comments &unfortunate and
not expected of a senator who is also a member of the
Constitution Review Committee. ( It is an attempt to
truncate our democracy and it is condemnable.8 (Note:
Turaki, who until 2007 was the Governor of Jigawa State, is
rumored to have been one of the primary bankrollers of the
former president's failed 2006 attempt at tenure extension.
End Note.)

Military Matters
------------------
7. (U) On May 21, 46 Nigerian soldiers returning from
peacekeeping duties in Darfur were killed in a road accident
after their convoy was rammed by a fuel truck on the
Bauchi-Maiduguri highway in northwest Nigeria. An unknown
number of soldiers were also injured. Ambassador Sanders
sent a condolence letter to President Yar'Adua expressing her
sympathy and the support of the American people.

8. (U) The Punch newspaper reported on May 28 that Nigerian
Foreign Minister Maduekwe said that AFRICOM is now acceptable
to the GON. Citing a difference between previous U.S.
military action in Africa, which he criticized and described
as "AFRICOM 1," he asserted that "AFRICOM 2" (the new
command) will be of benefit to Nigeria by way of training and
anti-terror capabilities. The Nigerian Chief of Defense
Staff, General Azazi also made positive public statement on
AFRICOM in the run-up to the Africa Endeavor exercise in July
2008.

9. (U) According to press reports May 23, Nigerian
Lieutenant-General Chikadibia Obiakor will be named the UN's
Military Advisor. He is currently serving as the Force
Commander of the UN mission in Liberia and had previously
served as Chief of Administration of the Nigerian Army.
Obiakor also served in ECOMOG 1996-1997. Nigerian press
attributes Obiakor's appointment to this key UN position to
GON lobbying efforts to obtain more UN positions for
Nigerians. FM Maduekwe is said to have finalized Obiakor's
appointment during his mid-May visit to UNSYG Ban Ki-Moon.

10.(SBU) Recent newspapers report suggest that funding for
the Nigerian Armed Forces may be doubled in the 2009 budget
in an effort to "tackle the gradual decay" brought on by
years of insufficient funding. Nigeria's current (2008)
budget reportedly allots around $1.6 billion for the
military, although it is said that President Yar'Adua was
recently able to raise another $680 million (from unknown
sources) in order to pay salary arrears to the armed forces.
Embassy contacts believe that the military will likely
receive additional funding in the 2009 budget, but they are
skeptical that the increase will be as large as what the

ABUJA 00001095 003 OF 006


press is reporting.

Niger Delta
-------------
11. (U) President Yar'Adua has presented the National
Assembly with a $679 million budget for the Niger Delta
Development Commission (NDDC). Out of this amount,
development projects are allocated approximately $611
million, while personnel, capital, and recurrent expenditures
are given approximately $68 million. During his May 29
televised press event, to note his one year in office,
President Yar'Adua promised to release all funds allocated to
the NDDC and to provide additional "intervention funds" as
part of his strategy to resolve the Niger Delta crisis.

Environment
------------
12. (SBU) The Senate Committee on Environment and Ecology
held hearings May 16 on a proposed bill to establish a
Nigerian National Climate Change Commission. The bill has
passed its second reading. The committee was chaired by
Senator Dr. Grace Bent and the Minister for Environment Mrs.
Halima Tayo Alao was one of the presenters. Embassy contacts
told us that in general, the spirit of the meeting was good,
but that the most relevant agencies were left out, and that
the NCCC would duplicate efforts of other government
agencies.

13. (U) Dr. Newton Jubinoh, retired CEO/Chairman of Costain,
international engineering and consulting firm, and a founder
of Fight Against Desert Encroachment (FADE), and publicist
Ebun Olatoye were in the United States from May 11-17 for a
VolVis program in Tucson, Arizona and Reno, Nevada on
desertification. Dr. Jibunoh led his third expedition across
the Sahara in late April and received a &Green Award from
the U.S. Embassy for his work on desertification. Upon his
return to Nigeria, the Mission plans to ask Dr. Jibunoh and
Ebun to give a presentation on their Sahara trip.

Energy
------
14. (SBU) Director-General/CEO of the Nigerian Energy
Commission, Professor Abubakar Sambo, told EconOff on May 19
that there is the potential to use Jatropha to produce
biodiesel for electricity generation and feedstock. Sambo
said there is excitement about the development of the
Jatropha crop because it needs little or no irrigation, can
be interplanted, takes three years to first yield and has a
30 year expected production cycle. The shrub plant does very
well in the arid and semi-arid areas of the 19 states of
northern Nigeria and a few other states in the south. The
GON sees the Jatropha development as a tool for poverty
reduction and to help meet Millennium Development Goals.
(COMMENT: The GON is not yet fully confident in its ability
to develop this market and has visited China and Brazil to
seek ideas on how to develop an appropriate infrastructure.
No production sites have been identified to date. END
COMMENT)

15. (U) Oyo State government signed a Memorandum of
Understanding with Zia Energy International, a subsidiary of
Zia Metallurgical Processes, Inc., a United States industrial
company that will be generating electricity from organic
waste. The project is expected to start before the end of
the year. Governor Adebayo Alao-Akala said that the dump
site at Awotan in Iddo Local Government Area had been
allocated to the U.S. firm.

16. (SBU) Nigeria,s U.S. educated Minister of the Federal
Capital Territory (FTC) told Ambassador on June 5 that the
FTC continues to partner with U.S. companies on alternative
energy sources, with a recently completed project to provide
solar powered street lights in parts of FTC.

Aviation
--------
17. (SBU) On May 14, the Nigerian government sent a letter

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from President Yar,Adua to President Bush contending that
the GON has commenced amending aviation laws in accordance
with FAA recommendations. These recommendations stem from a
January 2008 FAA technical assistance visit to Lagos, in
which the FAA concluded that the following legislation did
not meet International Civil Aviation Organization (ICAO)
standards - the Nigerian Airspace Management Agency Act
(NAMA) of 1999; the Federal Airports Authority of Nigeria Act
(FAAN) of 1996; and the Nigerian Meteorological Agency Act
(NIMET) of 2003. As a result of conflicting legislation,
several agencies roles and responsibilities are duplicative
and unclear. The GON amendment will give the Nigerian Civil
Aviation Agency (NCAA) full and unfettered authority for
regulatory oversight of the entire Aviation industry, in line
with standard of the International Civil Aviation
Organization (ICAO).

Debt
----
18. (U) The GON rejected a $2.5 billion loan offered by the
Chinese government for proposed new rail lines from Lagos to
other parts of the country. The Director General of the
Debt Management Office, Dr. Abraham Nwankwo, announced on May
20 that the decision was in line with President Yar,Adua,s
position to not take non-concessionary loans. The GON is
working on the legal framework which could make it possible
for the Nigerian private sector to access this loan for
infrastructure development.

19. (U) The GON borrowed $180 million from the World Bank to
fund educational sector development. The Education Minister,
Igwe Aja-Nwachukwu, announced that if Nigeria is to become
one of the top 20 economies by year 2020 it must begin to
educate students on entrepreneurship knowledge and skills.
The loan will be used to enhance development of the
entrepreneurship education at the universities.

Fiscal Responsibility
---------------------
20. (SBU) The United Nations Development Program (UNDP), UK
Department for International Development(DFID), the World
Bank and United Stated Agency for International Development
(USAID) in collaboration with the Government of Nigeria (GON)
rolled out technical assistance to the 36 states of the
federation to design and enact fiscal responsibility and
public procurement legislation. Workshops have been held in
Calabar, Kaduna and Abuja, reaching all of the states. In
opening the Calabar workshop which took place from May 12-15,
2008, the Deputy Governor of Cross River state Mr. Efiok
Essien Cobham noted that &adoption and implementation of
prudent fiscal policies and practices by the incumbent
government will lay a firm foundation for the socio-economic
prosperity of future generations.8 At the workshops,
experts shared lessons learned from similar legislation at
the federal level and in other countries with state delegates
who also discussed their specific legislative needs and
developed plans of action for advancing the process.
Comments by participants indicated commitment to advancing
the state-level laws in these areas. Through fiscal
responsibility regimes, public officials are formally
required to engage in economic planning, prudent budgeting
and responsible debt management. Public procurement
legislation will help to control corruption and ensure the
cost-effective utilization of public funds.

Agriculture
-----------
21. (SBU and Business Proprietary Information) On May 22
during a meeting between EconOffs and John Deere
International (JD), JD reps told us that the company had
signed a distribution agreement with the Nigerian company -
AgroPro. With AgroPro as its Nigerian distributor, JD
expects to grow its Nigerian business and hopes to open
thirty retail and service branches by 2011. JD is focusing
on renting tractors and equipment initially and expects to
move toward more sales in the future. The National Food
Resource Agency has contacted JD and is interested in

ABUJA 00001095 005 OF 006


subsidizing tractor sales to its partners. JD expects the
first service branch to open in Kaduna by the end of June and
with the first order for 30 tractors. Tractors suited to
Nigeria,s climate and conditions are manufactured in JD,s
factories in India and Brazil.

22. (U) The GON signed a Memorandum of Understanding (MOU)
with the Korean government for the establishment of a $1.8
million rice processing mill. The MOU, signed by the
National Food Reserve Agency and the Korean International
Cooperation Agency is for the development and improvement of
indigenous rice and post harvest processing in the country.
The project will be will be funded through grant-in-aid over
the next two years and the factory will be located in Bida,
Niger state.

23. (U) A 15 member delegation from the Kaduna
Nigerian-American Chamber of Commerce returned from a May
trade visit to Detroit with renewed interest in purchasing
U.S. products. In a conversation on May 30, the
delegation,s leader and the President of the Kaduna NACC,
Hajiya Habiba, thanked EconOfff for his assistance and
expressed particularly interest in purchasing U.S. products.
(NOTE: EconOff met with Kaduna NACC in September 2007 and
encouraged NACC to visit U.S. to seek ties. END NOTE).
Members of the delegation are interested in purchasing solar
equipment, and medical equipment. They are also seeking
advice on preserving and packaging agricultural products for
the U.S. market. Next step is Mission Nigeria will put
together a team representing Foreign Commercial Service,
Embassy Econ, Foreign Agricultural Service and AID to visit
Kaduna to provide information on purchasing U.S. products and
AGOA trade export assistance.

Oil and Gas
-----------
24. (SBU) An official with Nigerian Liquefied Natural Gas
(NLNG) told Econoff that the Chairman of the Niger Delta
Development Commission (NDDC) was behind legislation that
would repeal the 1989 NLNG Fiscal Incentives and Guarantees
Act. The 1989 Act provides the fiscal terms for Nigeria's
massive NLNG facility and exempts the company from certain
taxes, among them, a three percent levy on oil company
revenues that goes to support the NDDC. The repeal bill was
introduced by Ogun State Representative Gbenga Odowaiye
although NLNG is located on Bonny Island in Rivers State.
The NLNG contact confided that company's debt rating agencies
did not yet know of the bill. He did not think the bill
would pass, but worried that news of its introduction would
frighten potential investors in NLNG's train seven.
(Comment: News of the bill is now public. While it may not
ultimately pass the legislature, the proposal, coming in the
midst of Nigeria's attempt to attract foreign financing for
development of its natural gas sector, must have potential
investors scratching their heads. Odowaiye's claim that
repeal of the 1989 Act is necessary because NLNG refuses to
"contribute to the development of its host community" should
be easy to dismiss; the nearby town of Bonny enjoys almost
continuous electrical power supplied by generators used to
power the LNG facility. In fact, it may be one of the few
towns in Nigeria to have 24/7 electrical power. End
Comment.)

25. (SBU) The Nigerian National Petroleum Corporation wrapped
up a week long road show that sought to promote investment in
its recently released Natural Gas Master Plan. The plan,
long-circulated among industry insiders, calls for USD 30
billion dollars of investment in Nigeria's natural gas
infrastructure over the next decade. The Abuja presentation,
which was followed by presentations in London and Singapore,
was marred with several glitches. Most tellingly, the
Minister of State for Gas, Emmanuel Odusina, abruptly ended a
planned hour long question and answer period thirty minutes
into the session after one Nigerian industry executive after
the next took the opportunity to complain about the slow pace
of sector reform and the threat the Gas Master Plan posed to
existing gas agreements. One private equity contact was

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cautiously optimistic that good investment opportunities
existed, but he and others thought the full Gas Master Plan
was far too ambitious for a government not known for seeing
such projects to completion.

Other Important Issues
-----------------------
26. (SBU) Turnover at Customs Service: The GON appointed a
new Controller General of Customs, Hamman Kajoli Ahmed, on
May 27. Ahmed replaces Jacob Gyang Buba who,s four-year
tenure ended. Ahmed is a graduate of Ahmedu Bello University
in Zaria, and started his career as a Superintendent of
Customs and rose to Assistant Controller-General before the
new appointment. Industry contacts suspect that Buba was
removed due to corruption issues, but the GON provided no
official explanation for the change.

27. (U) Increase in bus fares in Lagos: Protests by commuters
in Lagos State caused local authorities to reverse a sudden
increase in bus fares on the Lagos State Bus Rapid Transit
(BRT) system. The price for a short trip had unexpectedly
doubled from 50 naira to 100 naira. Officials of the Lagos
Metropolitan Area Transport Authority (LAMATA), the operator
of the BRT, said they would revert to the old rate following
protests at some BRT terminals. Meanwhile, long queues at
BRT bus stops despite the inclement weather point to the
system's growing popularity. The World Bank-assisted project
is part of the state government's response to Lagos'
notorious traffic jams.

28. (SBU) Increase in child prostitution: During a May 30
meeting with PolEcon Chief, Godwin Morka, zonal head of the
Lagos National Agency for the Prohibition of Trafficking in
Persons (NAPTIP), said that an increasing number of child
prostitutes over the past few years have come from the local
government area of Oron, in Akwa Ibom state. Morka estimated
that the Lagos NAPTIP shelter has assisted 150 girls over the
past 18 months from this area alone. He estimated that
approximately 20,000 women from Akwa Ibom state are engaged
in prostitution in Lagos alone; 5,000-6,000 of which are from
Oron. The Oron Community Union, through its representatives
in Lagos, have been meeting with Morka, he said, in an
attempt to stem the tide.
SANDERS

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