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Cablegate: Nigeria: Northern Elites Take Over Oil Sector

VZCZCXRO2866
PP RUEHMA RUEHPA
DE RUEHUJA #1779/01 2290901
ZNR UUUUU ZZH
P 170901Z AUG 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 0655
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 7663
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 ABUJA 001779

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR (AGAMA)
DEPT OF ENERGY FOR CAROLYN GAY

E.O. 12598: N/A
TAGS: ENRG ECON EPET PGOV NI
SUBJECT: NIGERIA: NORTHERN ELITES TAKE OVER OIL SECTOR

REF: A. ABUJA 1694

B. ABUJA 1638

1. (SBU) Summary. Northern elites have added another key position
in the oil sector with the appointment of Engineer Abubakar Lawal
Yar'adua as the Acting Group Managing Director (GMD) of the Nigerian
National Petroleum Corporation (NNPC). Critics question his
competency noting that Lawal Yar'adua was previously the NNPC Group
Executive Director (GED) for Refineries and Petrochemicals and the
refineries did not function, just like his predecessor Funsho
Kupolokun. Moreover, the move is seen as Nigeria's Hausa-Fulani
ethnic group securing a stranglehold on oil leading to full-control
of the economy. Nigerian history is littered with examples of
ethnic tensions over resources destabilizing the nation and the new
President should tread lightly so as not to be seen as
disenfranchising other ethnic groups. End Summary.
.
-------------------------
Big Changes In Leadership
-------------------------
.
2. (U) In the last 30 days, the leadership in the most important
sector of the Nigerian economy has undergone major changes.
President Yar'adua inaugurated his cabinet on July 26, and announced
he will supervise the Ministry of Energy with the help of three
Ministers of State for Oil, Power and Gas (reftel B). On August 1,
he appointed Rilwanu Lukman, as Honorary Advisor on Energy and
Strategic Matters, and NNPC GMD Funsho Kupolokun resigned on August
10, and the most senior remaining GED, Engineer Yar'adua, took the
helm. Kupolokun's sacking was expected and had been rumored since
the beginning of the new administration.
.
--------------------
Hausa-Fulani Agenda?
--------------------
.
3. (SBU) According to George Osahon, Group General Manager of the
National Petroleum Investment Management Services (NAPIMS), a
subsidiary of NNPC, there were rumblings within the NNPC that the
appointment of Lawal Yar'adua as acting GMD, is a move by the
Hausa-Fulani to take back what they lost during former President
Obasanjo's administration. Osahon did not want to discuss Lawal
Yar'adua's suitability for the job, or competence, but noted that
during his previous tenure as GED for refineries and petrochemicals
the refineries were in a poor state.

4. (SBU) Dr. Ayo Balogun, Group General Manager and Head NNPC
London Office, told us that the administration wants Nigeria to
become an exporter of refined petroleum products. Lawal Yar'adua's
appointment was in line with this plan to reduce petroleum products
importation by reviving the refineries in the short term, and
building new refineries in the medium to long term. Balogun
commented that Lawal Yar'adua's previous experience working in the
Kaduna and Port Harcourt refineries demonstrated he was
well-qualified to implement the President's plan.

5. (SBU) Balogun reported that it was a long-standing
administration plan to make Lawal Yar'adua the GMD but there were
concerns regarding public perception because the acting GMD and the
President, although not from the same family roots, share the same
surname, hail from Katsina State, and are childhood friends.
Concomitantly, the most senior GED was Dr. Edmund Ayoola, who
retired in June paving the way for Lawal Yar'adua to conveniently
become the most senior GED.
.
---------------
Lukman Steps In
---------------
.
6. (SBU) Rilwanu Lukman's appointment as the Honorary Presidential
Advisor on Energy was seen by critics as recycling of the "old
brigade." The position receives no salary, but Lukman's resources
are vast including large homes in London and Vienna. Lukman was a
former OPEC scribe and had served in government in various
capacities overseeing the oil industry since 1984. Though
highly-regarded in oil circles both locally and internationally,
some analysts opine that if Lukman was as competent as claimed,
Nigeria's oil industry would not be in its present deplorable state.
There are other analysts who hail Lukman's appointment because of
his pedigree and respect in international circles.
.
----------------------------------------
Niger Delta Problems Unlikely to Go Away
----------------------------------------
.

ABUJA 00001779 002 OF 002


7. (SBU) Osahon told us he worked with Lukman on the NNPC staff and
said Lukman did not support a policy appeasing the Niger Delta
peoples. Lukman believed that people in the Niger Delta had been
pampered by the government and that militant activities must be
forcefully checked. Osahon opined that if Lukman's earlier position
on the Niger Delta had softened, then he was suitable for the job of
presidential advisor, although preference should have been given to
someone younger and more in tune with the oil industry.
.
-------
Comment
-------
.
8. (SBU) Keeping the reins of the Energy Ministry and other key
positions in northern hands probably is a move by Yar'adua to
consolidate his power, as energy is the fountain of money and power
in Nigeria. He must tread carefully because appointments to key
government positions help balance ethnic interests, thereby
satisfying the various ethnic nationalities. When ethnic groups
feel marginalized in federal appointments, it leads to conflict.
Now that additional key oil sector positions are headed by
northerners ethnic marginalization could increase causing tension.
This trend has already raised suspicions among various ethnic
nationalities. The Niger Delta indigenes may feel further
marginalized and hinder efforts to solve the Niger Delta problem.
However, if this new leadership can move NNPC in the management
directions of Brazil's Petrobras and other efficient national oil
companies, then real progress is possible.

GRIBBIN

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