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Cablegate: Nigeria: Economic Roundup October 30

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ABUJA 002961

SIPDIS


STATE FOR AF/W, AF/EPS
STATE PASS USTR
STATE PASS DEPARTMENT OF ENERGY


E.O. 12958: N/A
TAGS: ECON EPET EINV EAIR NI
SUBJECT: NIGERIA: ECONOMIC ROUNDUP OCTOBER 30

REF: ABUJA 2768


1. This periodic economic report includes:
--U.S.-Nigeria Air Cargo: Taking Advantage of AGOA
--GON Re-Thinks Nigeria Airways Deal
--GON to Set Domestic Content Requirement for JV Oil Contracts
--Local Concerns Over Niger Delta Dredging


U.S.-Nigeria Air Cargo: Taking Advantage of AGOA
--------------------------------------------- ---
2. U.S. Export-Import Bank Director Joseph Grandmaison and
Ambassador Jeter met Minister of Aviation Kema Chikwe in
Abuja last week to encourage Nigerian participation at the
November 19-20 African Regional Air Cargo Transport
Initiative forum in Washington, D.C. A U.S. Trade and
Development Agency (TDA) consultant made the same pitch last
week to Lagos-based officials at the Ministry of Aviation,
Nigerian Civil Aviation Authority, and Federal Airport
Authority of Nigeria (FAAN). The air cargo initiative,
sponsored by TDA, the Department of Transportation, and the
Ex-Im Bank, seeks to encourage air cargo transport between
Africa and the United States and, indirectly, bilateral trade
under AGOA. Grandmaison explained in his meeting with Chikwe
that much of the tariff savings under AGOA are unrealized
because shipping--most often via Europe--is costly for trade
between the United States and Africa, nullifying the
advantage to Africa that AGOA was designed to bestow.


3. The TDA consultant reports that FAAN officials in Lagos
recognize the benefits of a strong air cargo link to the
United States. In anticipation of increased air cargo
traffic, FAAN is expanding cargo facilities at Murtala
Muhammed Airport in Lagos, and in August, a team from the
U.S. Transportation Security Administration conducted cargo
security training for FAAN officials.


GON Re-Thinks Nigeria Airways Deal
----------------------------------
4. The deal signed June 28 between UK-based Airwing Aerospace
and the Ministry of Aviation to restructure Nigeria Airways
as a joint venture called Air Nigeria is coming under
increasing scrutiny (reftel). President Obasanjo has stepped
into the fray, calling for the establishment of a ten-person
committee to review the Air Nigeria deal and chart a new way
forward for a Nigerian national carrier. The Bureau of Public
Enterprises' Director of Operations Tijjani Abdullahi
promises Econoff that additional details on the committee
will be available in the weeks to come.


GON to Set Domestic Content Requirement for JV Oil Contracts
--------------------------------------------- ---------------
5. Group Managing Director of the Nigerian National Petroleum
Corporation (NNPC) Jackson Gaius-Obaseki is reported in the
local press as having announced in Ulsan, South Korea, that
future contracts for joint ventures in oil and gas
exploration and extraction will include a 25 percent
local-content requirement. He suggested that basic
construction and engineering, in particular, could be
procured locally. Separately, Chairman of the Senate
Committee on Petroleum Resources David Brigidi told Econoff
that the National Assembly is considering a "Local Content
Act" that would likely be passed this year. The current draft
of that bill does not specify the amount of local content
that would be required. (Comment: To date, there has been no
discussion of how that local content would be procured,
whether in foreign exchange or Nigerian naira. End Comment.)


6. Oil executives in Lagos and Port Hartcourt told Econoffs
that these new policies would pose major obstacles for future
investments. However, there appears to be confusion among
them about the amount of domestic content that would be
required, with estimates ranging from 30 to 50 percent. Post
will follow this issue closely.


Local Concerns Over Niger Delta Dredging
----------------------------------------
7. Chief Dr. E.A. Emerhi, national president of Nigeria's
office of the International Association for Impact
Assessments (IAIA), told Emboffs that the IAIA has not yet
staked out a position on whether the Niger River should be
dredged. Emerhi discussed the perspectives of large-scale
traders (who support the project) and smaller farming
communities (who oppose it). The Nigerian delegation to the
November 7-8, 2002, conference sponsored by Tulane University
and the U.S. Army Corps of Engineers in New Orleans on
"Comparing Rivers: The Mississippi and the Niger" will
include members of diverse ethnic and geographical background
as well as government, academic, and private sector
representatives who will present these viewpoints.


8. Emerhi said that the GON has not yet demonstrated the
capacity nor will to address local concerns over the proposed
dredging project, but she is hopeful that government
officials will become more sensitive to these concerns
through participation in conferences like the one being held
next month in New Orleans.
JETER

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