Search

 

Cablegate: Aes - Update On Contract Dispute

VZCZCXRO4873
PP RUEHMA RUEHPA
DE RUEHOS #0507 1981441
ZNR UUUUU ZZH
P 171441Z JUL 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC PRIORITY 9224
INFO RUEHUJA/AMEMBASSY ABUJA 9024
RUEHWR/AMEMBASSY WARSAW 0467
RUEHCD/AMCONSUL CIUDAD JUAREZ 0446
RUEHIT/AMCONSUL ISTANBUL 0445
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHDC

UNCLAS LAGOS 000507

SIPDIS

SIPDIS

SENSITIVE

DEPT PLEASE PASS TO USTR
DEPT PLEASE PASS TO JAMES WILLIAMS, OPIC

E.O. 12958: N/A
TAGS: ECON PGOV EINV PREL NI
SUBJECT: AES - UPDATE ON CONTRACT DISPUTE

REF: LAGOS 147

SENSITIVE BUT UNCLASSIFIED; HANDLE ACCORDINGLY

1. (U) Summary: On July 11, AES Nigeria Barge Ltd. (AES), a U.S.
power services company, met with President Umaru Yar'Adua to discuss
an on-going tax exemption dispute (reftel). The meeting was attended
by all stakeholders, including the Ministry of Finance and Energy,
Federal Inland Revenue Service (FIRS) and the Power Holding Company
of Nigeria (PHCN). AES perceived the meeting as a breakthrough after
months of impasse and looming escalation. End summary.

--------------------------------------------- -------
A Focused And Objective Meeting May Yield Resolution
--------------------------------------------- -------

2. (U) On July 11, Hassaan Mirza, Chief Financial Officer and Ahmer
Nadeem, Managing Director, AES Nigeria Barge Ltd. (AES), a U.S.
power services company, met with President Umaru Yar'Adua to discuss
an on-going tax exemption dispute (reftel). The meeting was attended
by all stakeholders, including Vice President Jonathan Goodluck,
Secretary to the Federation, Babagana Kingibe, Special Advisor to

SIPDIS
the President on Power, Joseph Makoju, and representatives of the
Ministry of Finance and Energy, Federal Inland Revenue Service
(FIRS), and the Power Holding Company of Nigeria (PHCN).

3. (U) After a presentation on the tax dispute issue, Nadeem
appealed to Yar'Adua to intervene in order to avoid arbitration.
Makoju expressed satisfaction with the Power Purchase Agreement
(PPA) Amendment already negotiated, and faulted the Ministry of
Finance for the delay in its implementation since June 2006.

4. (U) President Yar'Adua asked questions aimed at ascertaining the
validity of the PPA, AES' legal position, Lagos State's involvement,
and the likely outcome of arbitration. The Solicitor General
conceded that arbitration would likely be unfavorable for the GON.

5. (U) Some officials were dissatisfied at what they perceived as
the "one-sided" nature of the contract, noted Mirza. Yar'Adua,
however, was focused on understanding the facts of the case and
instructed those complaining to put aside their feelings as to the
contract being unfair, as the 'contract had been entered into'.

6. (U) President Yar'Adua asked whether AES was still agreeable to
the PPA Amendment, which Mirza and Nadeem confirmed. Since the
meeting, Mirza said Yar'Adua constituted a committee, headed by
Makoju and instructed to report to the President directly, to deal
with the issue.

-------
Comment
-------

7. (SBU) Post has been following this issue closely over the past
few months, and we are encouraged by President Yar'Adua's objective
and pragmatic approach to this matter. This may signal not only
resolution in this particular case, but, more broadly, increased
transparency and respect for contractual obligations by the
government. End comment.

© Scoop Media

 
 
 
World Headlines

 

Gordon Campbell: On The Washington Riot And The Georgia Results
Hong Kong and Washington DC. On the same morning, the tyrants in power in Beijing and their counterpart in the White House have shown how they refuse to accept the legitimacy of any different points of view, and the prospect of losing power… More>>

WHO: Vaccination No Guarantee Of Virus Eradication

In the final World Health Organization (WHO) COVID-19 press conference of the year, on Monday, senior officials warned that the virus is 'not necessarily the big one', and that there is a real chance of another, more serious pandemic spreading ... More>>

Covid: Two Billion COVID Vaccine Doses Secured, WHO Says End Of Pandemic Is In Sight

The end of the pandemic is in sight but we must not let our guard down, the head of the World Health Organization (WHO) said on Friday, as he welcomed the news that the global vaccine partnership COVAX has lined up almost two billion doses of existing ... More>>

UN: Guterres To Seek Second Five-year Term
António Guterres will be seeking a second five-year term as UN Secretary-General, which would begin in January 2022.... More>>


UN Rights Office: Iran Execution Of Child Offender Breaks International Law

The execution of an Iranian man for a crime allegedly committed when he was 16 years old has been condemned by the UN Human Rights Office (OHCHR) and raised concerns over violations of his right to a fair trial. In a statement released on Thursday, ... More>>

UN News: Fighting Displaces Over 500,000 In Northern Mozambique, Reports UN Refuge Agency

Attacks by armed groups in Mozambique’s Cabo Delgado, Nampula, Zambezia and Niassa provinces have displaced more than 530,000 people, many of whom have been forced to move multiple times, the UN refugee agency (UNHCR) said on Friday. According to ... More>>