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

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

1. (U) The following is a joint Embassy Abuja/ConGen Lagos
compilation of August 16-31 political/economic highlights, which did
not feature in our other reporting, covering:

--Military, Security, and Bakassi
--Economic and Business
--Southern Political
--Oil and Gas
--Other News

------------------------------
Military, Security, and Bakassi
-------------------------------

2. (U) On August 25, the Nigerian Senate said it would "continue to
work on" the ratification of the Green Tree Agreement, despite the
fact that the final handover of the peninsula occurred August 14.
Deputy Senate Leader Victor Ndoma-Egba said that the Senate Joint
Committee on Foreign Affairs, Judiciary, States and Local Government
would continue to scrutinize the treaty, and would produce a report
recommending what actions the Senate should take.

3. (U) Twenty eight military officers who returned in April 2008
from serving in the United Nations peacekeeping force in Liberia are
suing the Nigerian Army over their alleged unlawful detention.
Seeking immediate release and 30 million naira in damages, they say
that after a two-week wait at Akure Barracks they were denied their
$6000 each allowance, made to return to their home base, and then
were summoned to return the next month merely to be offered only
$3000. Upon complaining, they were arrested and have been held
since July 5. Included as a respondent in the suit is new Chief of
Army Staff Major General A. B. Dambazau, who, upon assuming his new
position, promised to stamp out insubordination and disrespect in
the ranks. Some observers believe the lawsuit is a result of
soldiers' expectations of better treatment in a hopefully
increasingly professional Nigerian military.

---------------------
Economic and Business
---------------------

4. (SBU) Foreign Agricultural Service Lagos reports that two major
rice importers are filling their warehouses with the product in
advance of a possible re-imposition of a 109% tariff on imported
rice. Despite newspaper reports of some importers hoarding
duty-free rice in hopes of reaping a windfall, these two importers
claim they do not expect the GON to re-impose the tariff on imported
rice until early 2009 at the earliest and say they are pushing for a
30% tariff, or none at all, given the still high global rice price.
(Note: The GON temporarily suspended its 109% tariff on imported
rice in May. The suspension is due to expire October 31. End
Note.)

5. (SBU) According to Costal Inland Marine Services (CIMS), a
subsidiary of U.S.-based Trico Marine, maritime companies in the oil
service industry have adopted self-help measures at tremendous cost
to counter piracy in Nigeria's coastal water. The companies,
organized through the Marine Industrial Service Consultative
Organization (MISCO), have recently agreed to move their service
vessels in convoys and restrict movements to daylight hours. The
threat of piracy has kept many companies from signing contracts.
CIMS said the industry is concerned about the bureaucratic and
financial constraints facing the Nigerian Maritime Administration
and Safety Agency (NIMASA) and the efficacy of the Nigerian Navy's
patrols.

6. (SBU) Mrs. Bola Kupolati of the Nigerian Department of Fisheries
told Lagos Poloff on August 25 that piracy has become a serious
problem for the Nigerian fishing fleet. The fleet, 90% of which is
based in Lagos, did not leave port from April to the end of June
after pirate attacks on fishing trawlers resulted in the deaths of
several fishermen. Some of the fishing fleet risked going to sea
again in July and August after promises of better protection from
the Nigerian Navy, but according to Kupolati the pirates are better
armed than the Navy patrol boats and the Navy is more interested in
interdicting illegal bunkering than protecting fishermen.

7. (SBU) A $350 million tourist complex, including a shopping
center, movie studios and entertainment park built in the jungle

ABUJA 00001827 002 OF 003


near Calabar, Cross River State, remains closed. Although the main
buildings and infrastructure are complete, the complex has yet to
open because the necessary law permitting a planned retail
free-trade zone has not been published. According to Daniel
Ologunleko, the Deputy General Manager of the Tinapa free trade
zone, the resort is expected to open in December. Ologunleko said
the resort had contracts with several retailers, notably Shop-Rite
from South Africa, and added that it would welcome American
retailers such as Wal-Mart. The existing Tinapa complex also
remains stymied due to policy and procedural issues.

8. (SBU) At a time when the international shipping community is
facing a severe shortage of trained seafarers to man an expanding
fleet, the Maritime Academy of Nigeria (MAN) remains incapable of
training Nigerians to the standards necessary to qualify for these
jobs. MAN, located in Oron, Akwa Ibom State, lacks a training
vessel, computers, internet access for students, simulator
facilities, and equipped laboratories. Only 13% of the staff is
qualified as either a master mariner or chief engineer. One third
of the staff has no experience at sea whatsoever. Graduates of the
two year basic course or the three year "advanced" course cannot
meet international standards required of seafarers.

9. (SBU) After 50 years in Nigeria, Panalpina World Transport
(Nigeria) Ltd., a subsidiary of Swiss-based Panalpina, an
international provider of forwarding and logistics services, will
sell its operations to Nigerian owners by September 30. The
decision to sell resulted from the ongoing investigation into
possible violations of the Foreign Corrupt Practices Act (FCPA) by
Panalpina USA. The new company will be launched in early October,
and will retain 200 of the 700 local employees, including expatriate
staff.

-----------
Oil and Gas
-----------

10. (SBU) A senior U.S. oil company executive told the Charge'
d'Affaires on August 28 that the Yar'Adua administration has
finished drafting legislation on comprehensive oil sector reform,
and has sent it to the legislature for consideration. (Note: U.S.
oil company government relations contacts say they have not yet seen
a copy of the proposed legislation. End Note.) The executive
estimated reforms would not begin before Jan 1, 2010. He disputed
the GON's claims that the legislation was the result of a dialogue
with the oil industry, describing the relationship as "at best two
monologues." The executive said oil companies will not make
investment decisions in multi-billion dollar projects while so much
uncertainty surrounds the future of the Nigerian oil sector.
(Comment: Policy and security uncertainty are already deterring
investors. Final investment decisions on the Brass and OK liquefied
natural gas plants have been delayed and the investor response to
Nigeria's gas master plan has been underwhelming. The lead oil
sector analyst of a major U.S. investment bank told EnergyOff on
August 22 that "Nigeria isn't even on the investment radar screen."
End Comment.)

11. (SBU) ExxonMobil and the Nigerian National Petroleum Corporation
signed an agreement on August 31 to begin planning a gas to liquids
plant in Akwa Ibom State. The plant would convert natural gas to
diesel and naphtha. Billed in the local press and Reuters as a
solution to Nigeria's need to import gasoline, the agreement is
simply an agreement to begin planning. The project is far from the
final investment decision stage. As a point of comparison, Chevron
began feasibility studies for its Escravos gas to liquids plant in
1998. On May 18 Sasol, Chevron's partner in the Escravos plant,
announced it was reviewing its participation in the project as costs
soared to $6 billion and the completion date was pushed back until
2011.

------------------
Southern Political
------------------
12. (SBU) Kidnappers who abducted the chairman of the Ondo State Oil
Producing Area Development Commission (OSOPADEC), Chief Adewale
Omojuwa, and six OSOPADEC commissioners on August 21 were trying to
extort money from OSOPADEC, Dele Atunbi, Chairman of the Ondo
Chapter of the Nigerian Union of Journalists, told PolSpec August
25. Atunbi said that criminal/militant activities have been on the

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increase in Ondo riverine area, led by restive youth seeking
relevance and easy money, particularly through kidnapping.
----------
Other News
----------

13. (SBU) Cordelia Ebiringa, Deputy Superintendent of Immigration
and head of the Trafficking in Persons Unit of the Cross Rivers
State Command of the Nigerian Immigration Service, told Poloff
August 19 that her unit is under-funded and under-trained. Ebiringa
stressed that slavery is "endemic" in Cross River State and widely
tolerated. The most common victims of the trade are children and
young women. Although Ebiringa said she had no statistics to back
her up, anecdotal evidence suggested that major international
trafficking networks involved Nigerians along all segments of the
route. Internal slavery, however, is also a major problem, with
children from Cross Rivers being taken to the Southwest to work on
plantations or as domestic help. Ebiringa praised the American Bar
Association, which had brought experts to Nigeria in June for a
seminar on Trafficking in Persons which was attended by Nigerian
officials from a variety of agencies.

14. (SBU) Governor Christopher Alao-Akala of Oyo State paid a
courtesy call on the Lagos Consul General on August 27. The Consul
General shared information about the Foreign Commercial Service with
Alao-Akala, who mentioned two Americans who are active in the Oyo
business community; one is involved with a waste-to-ethanol project,
and the other is pursuing work in the free trade zone outside
Ibadan. Alao-Akala told the Consul General he was slated to travel
on September 1 with Vice President Goodluck Jonathan to Zambia for
the Presidential Funeral. (Note: the Vice President did not attend
due to President Yar'Adua's absence from Nigeria. End Note.)

PFLAUMER

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