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Cablegate: U.S. Mission Partners with American Business On Energy

VZCZCXRO1097
PP RUEHMA RUEHPA
DE RUEHUJA #2243/01 3191218
ZNR UUUUU ZZH
P 141218Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4447
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 0255
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 002243

SENSITIVE
SIPDIS

DEPT PASS TO USTR-AGAMA, USTDA-FITTS/MARIN, EXIM-RICHTER
PASS USAID AFR/SD FOR MICHAEL CURTIS
DEPT OF ENERGY FOR CAROLYN HAYLOCK AND GEORGE PERSON

E.O. 12598: N/A
TAGS: EPET ECON ENRG PGOV EAID ETRD EFIN EINV NI
SUBJECT: U.S. Mission Partners with American Business on Energy
Issues

SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE USG

1. (SBU) SUMMARY U.S. Mission in Nigeria is working with the
American Business Council (ABC) to operationalize a public-private
partnership on energy issues and other economic and business issues.
The Ambassador opened a recent meeting with ABC with a review of
progress to date, which includes a big step in influencing reforms
in the trade regime and the elimination of almost half of all import
bans. She said that she looked forward to working even more closely
with ABC to ensure continued economic growth in Africa's most
populous country, while opening further opportunities for U.S.
businesses. Discussions in the working segment of the meeting
included ABC's thoughts on pending local content legislation. ABC
members said the current global financial crisis will shelve
development projects that the international oil companies (IOC) were
planning in the near-term as well as exploration due to the credit
crunch, security, budget cuts, and failure of Government of Nigeria
to pay monies owed to joint ventures. The proposed local content
bill has had its second reading in the House and is now before the
Upstream Petroleum Committee. ABC wants to ally with U.S. Mission
in working with regulatory authorities and the Power and Gas
Ministries to support progress on electric power generation. The
Nigerian Extractive Industries Transparency Initiative is moving
forward to assess state of measurement of petroleum resources. END
SUMMARY.

2. (SBU) Ambassador Sanders opened U.S. Mission meeting with the ABC
at the Embassy on October 21. In her welcome remarks the Ambassador
emphasized the need to operationalize the ongoing cooperation
between USG Team Nigeria and the ABC. The two teams, she continued,
worked closely together in the runup to last December's TIFA
Council. The partnership has already netted results, including
reforms in the tariff regime and the elimination of almost half of
all import bans. The Ambassador noted the meeting's agenda focused
on energy issues critical to Nigeria's economic success and hopes
for broad-based development. She said that she looked forward to
working even more closely with ABC to ensure continued economic
growth in Africa's most populous country, while opening further
opportunities for U.S. business.

3. (SBU) Econ Counselor opened the working session of the meeting,
focused on energy issues--local content and electricity challenges
in particular. In addition he said that the USG Team would like to
get ABC's input towards a measurements study about to be tendered by
the Nigerian Extractive Industries Transparency Initiative (NEITI)
as part of its mandate to ensure accountability for resource
revenues. One ABC representative, a founding board member of NEITI,
said he finds forward progress of the organization stalled and in
need of an infusion of recognized leadership that could keep up
momentum.

4. (SBU) The discussion on the local content issue was informative,
with participation by all in attendance. It was noted that American
companies around the world typically favor the development of local
content including as a contributor to cost reduction and
profitability. At the moment, the Nigerian House of Representatives
is reviewing a Senate Bill which would mandate high percentages of
local content in many services categories, to a degree which could
impede oil and gas production. A senior official with a support
services company mentioned that the Nigerian National Petroleum
Company (NNPC) has already begun listing bid packages with the
notation that only indigenous companies can bid, so ownership is now
an issue as well as content. The group felt that there is personal
rent seeking going on--a motivation for some who may try to move the
consensus back towards state domination of the economy.
Additionally, projects that the international oil companies (IOC)
were planning in the near-term may be put back on the shelf due to
the credit crunch, security, budget cuts, and failure of NNPC to pay
money owed to joint ventures.

5. (SBU) ABC plans to work on a position paper on the electricity
challenge to the business community and the economy. Econ Counselor
said that the U.S. Mission looked forward to working with ABC to
advise regulatory, power and gas officials on terms and conditions
needed to boost the investment in power generation. Also, the
Mission looked forward to ABC's comments on the terms of reference
for the NEITI measurements study, and how we can support our
companies' interests while assisting NEITI in fulfilling its
important mandate.

CURRENT DEVELOPMENTS
-------

13. (SBU) A senior official of the Office of the Clerk of the House
told Econ Counselor at November 4 election watch event that the

ABUJA 00002243 002 OF 002


pending local content bill has had its second reading before the
House and has been sent to the Upstream Petroleum Committee for
consideration. Hearings have not yet been scheduled. At November 5
post-election reception at the CMR, NEITI Executive Secretary told
Econ Counselor that NEITI has put out advertisements for expressions
of interest to conduct the measurements study. In discussions with
Econ Counselor November 11-13, service company and IOC reps said
they believed that NNPC and the Executive Branch favored an approach
on local content that allowed for administrative discretion rather
than legislated line-item quotas. At the same time, they recognized
the need to engage with the House on the current bill. The
newly-formed Lagos based service companies group is putting together
a new set of comments for the House that incorporate points from
construction companies supporting oil and gas exploration and
development projects.

9. (U) This cable was coordinated with Consulate Lagos.

SANDERS

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