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Cablegate: Nigeria: Southeast, Southsouth Infastructure Projects Make

VZCZCXRO3858
RR RUEHMA RUEHPA
DE RUEHOS #0489/01 3461503
ZNR UUUUU ZZH
R 111503Z DEC 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0354
INFO RUEHUJA/AMEMBASSY ABUJA 9995
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 03 LAGOS 000489

SENSITIVE
SIPDIS

STATE PASS OPIC FOR DERB, ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR LFITTS, PMARIN
STATE PASS USAID FOR NFREEMAN, GBERTOLIN, GWEYNAND, SLAWAETZ
STATE PASS EXIM FOR JRICHTER, KJACKSON, KJANIK
DOC FOR 3317/ITA/OA/KBURRESS
DOC FOR 3310/USFC/OIO/ANESA/DHARRIS
DOC FOR USPTO-PAUL SALMON
TREASURY FOR DFIELDS, AIERONIMO, RHALL, DPETERS
TRANSPORTATION FOR KSAMPLE

E.O. 12958: N/A
TAGS: EINV EFIN ECON EAID PGOV NI
SUBJECT: NIGERIA: SOUTHEAST, SOUTHSOUTH INFASTRUCTURE PROJECTS MAKE
PROGRESS

Ref: A) Lagos 399
B) Lagos 303
C) Lagos 265

1. (SBU) Summary: Abia State's Geometric independent power project
(IPP), projected to be operational April 2009, has started
construction on only one substation to date. Akwa Ibom's (AI) IPP,
scheduled for testing in December 2009, will generate 165 megawatts
(MWs) of power, 65 of those for distribution within the state. AI's
international airport will be operational in December 2009; the
project coordinator predicts cargo and domestic traffic, now using
the Calabar airport, will make AI's airport profitable. Tinapa
business resort, in Cross River, has received Federal Government's
permission to open, and the associated resort hotel will open in
December 2008. The five-star Le Meridien in Akwa Ibom and Tinapa in
Cross Rivers will link by water taxi. Both Abia and Akwa Ibom are
working to raise internally generated revenue to offset the drop in
oil price. EconOff noted significant progress on most projects since
her most recent trip two months ago. End Summary

2. (SBU) A visit to Enugu, Anambra, Abia, Akwa Ibom, and Cross River
States November 16-20 showed that progress was being made on
ambitious infrastructure projects in the Southeast and South-south.


Geometric's April 2009 Commissioning Unlikely
---------------------------------------------

3. (SBU) I.M. Ukut, Geometric's Technical Adviser, believes the
power plant will be operational April 2009. (Note: Geometric is an
independent power project (IPP) which will service industries in
Aba, the industrial heart of Abia State, and not connect to the
national grid. End Note) Of the four power substations Geometric is
to build, construction has only begun on the one substation on the
plant site. Three GE turbines are already on site. Ikut said
Geometric had acquired more land for the expansion phase, estimated
to begin in 2011, which will bring Geometric's total power
generation up to 300 megawatts (MWs) and supply power to Abia's
northern region and possibly to Port Harcourt in Rivers State.
Ndukwe Adindu, Commissioner for Finance, Abia State, said Geometric
will provide the much needed power for Aba's manufacturing
industries and some public facilities. (Comment: Given the
construction progress observed on the ground, it is unlikely that
Geometric will be operational by April 2009. End Comment)

Akwa Ibom's Road, Airport, IPP Goals Ambitious
--------------------------------------------- -

4. (SBU) Bassey Akpan, Commissioner for Finance, Akwa Ibom (AI),
said the Akwa Ibom State Government (AISG) is constructing and
rehabilitating 600 kilometer (km) of road. (Ref A) AISG plans to
construct 20 km of road in every local government area, and promises
to have each road connect at least three communities. AISG, like the
Abia State Government, is also taking on the rehabilitation of
federal roads. (Note: EconOff observed that, in the two month period
since her visit to AI, road expansion and construction activities
had increased significantly. End Note)

5. (U) According to Akpan, the 165 MW Ibom Power Project is at 95
percent completion and will conduct a test run in December 2008.
The AISG and the Power Holding Company of Nigeria (PHCN) had agreed
to the state "retaining" 65 MWs of the 165 MWs the plant will
generate for the national grid. (Note: Akpan told Pol-Econ Chief in
a subsequent conversation that a clause in the license given by the
Federal Government (FG) provides for distribution of 65 MWs within
the state. Akpan noted, however, that even that allocation cannot
guarantee a steady supply of power to the state. Akpan said that
the Nigerian Gas Company's (NGC) gas line from Port Harcourt
experiences frequent disruption, resulting NGC says, from an
insufficient supply of gas. End Note)

6. (SBU) The USD 300 million Ibom International Airport will be
commissioned in March 2009, Akpan projected. (Note: U.S. Dyncorp was

LAGOS 00000489 002 OF 003


the original contractor for this project. End Note (Ref C)) However,
Marco Fenini, Project Coordinator, Akwa Ibom International Airport
Company (AIIA), said the airport will be operational in September
2009 barring any delays. The airport hangar will be able to
accommodate two Boeing 747s, and the runways will span 3.2 km. A
road linking the airport directly to Uyo, the state's capital, is
under construction. Fenini believes that the AISG will be able to
recover its investment through the airport's international air cargo
operation. He also said that because 80 percent of air traffic at
the Calabar Airport, the nearest airport to AI, comes from AI,
passenger traffic will also buoy the new airport's businesses. The
AISG had signed four Memoranda of Understanding (MOUs) with the
local communities to assure that airport employees are hired
locally. Currently, there is a 20 to 1 ratio of local to expatriate
staff.

Tinapa Opens for Businesses
---------------------------

7. (U) Francis Ekom, Assistant General Manager, Tinapa Business
Resort Ltd., said the resort had finally obtained approval from the
FG in early November, and that some shops have already opened for
business. (Ref B) The two-star, 243-room hotel and remaining shops
will open in December 2008, and the casino and theater will open in
January 2009. Retail giants, including Walmart and South
Africa-based Flamingo and Shoprite, are slated to come to Tinapa.
(Note: Post has not been able to confirm Walmart's participation.
End Note) The resort currently employs 6,000 local employees during
the construction phase of the project, and has the potential of
hiring up to 12,000 employees once it becomes fully operational.
The state initially had planned to go to the capital market to raise
additional funds through an initial public offering (IPO), but had
shelved this plan given the current global financial crisis.

Akwa Ibom-Cross Rivers Collaborate on Tourism
---------------------------------------------

8. (SBU) Akwa Ibom and Cross Rivers state governments are looking to
link the five-star Le Meridien Hotel and Golf Resort (Uyo, Akwa Ibom
State) with Tinapa (Calabar, Cross Rivers State) through a water
ferry system. Akwa Ibom Governor Godswill Akpabio has visited
Tinapa twice for this purpose, Ekom said. A successful linkage
between Uyo and Calabar, a popular tourist destination, will boost
the tourism industry and scale up the commercial and socio-economic
dividends, Ekom posited.

Oil Price Dive Spurs IGR
------------------------

9. (SBU) In light of falling oil prices, states are exploring ways
to raise their internally generated revenue (IGR) as a way to fund
development projects. According to Commissioner Adindu of Abia
State, eighty percent of the state's revenue comes from the FG
through derivation and allocation, and only 20 percent is internally
generated. Expecting a decline in the revenue stream from the FG for
2009, Abia State Government (ASG) plans to raise its IGR to 50
percent of all revenue through taxation. ASG is devising new
taxation enforcement schemes for businesses and the informal sector,
including mandating business registration and working through trade
and labor unions. Adindu believes the IGR will rise and make up
fully 40 percent of Abia's revenue by May 2009. Commissioner Akpan
of AISG also noted the need to find alternative revenue sources
through taxation and by developing the agriculture sector. (Note: He
told Pol-Econ Chief that the state has little borrowing, but that a
total of 256 people-oriented projects, including free education at
all levels, will require substantial revenue. End Note)

10. (SBU) Comment: Large-scale infrastructure projects are dotting
Nigeria's southeast and south-south regions. While state government
officials may be overly optimistic about projected completion dates,
EconOff noted significant progress on most fronts, including roads,
power projects, airports and tourism facilities since her trip only
two months ago. End comment.

LAGOS 00000489 003 OF 003

11. (U) This cable has been cleared by Embassy Abuja.
Blair

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