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Cablegate: S/Ciea Goldwyn Encourages Strengthening Transparency

VZCZCXRO3962
OO RUEHMA RUEHPA
DE RUEHUJA #2099/01 3240917
ZNR UUUUU ZZH
O 200917Z NOV 09 ZDK
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7527
INFO RUEHOS/AMCONSUL LAGOS 2323
RUEHJO/AMCONSUL JOHANNESBURG 0127
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 ABUJA 002099

SENSITIVE
SIPDIS

STATE PASS USAID AFR/SD FOR CURTIS, ATWOOD AND SCHLAGENHAUF
STATE PASS TO USTDA-PAUL MARIN, EXIM-JRICHTER
STATE PASS TO USTR-LAURIE-ANN AGAMA
STATE PASS TO OPIC-BARBARA GIBIAN AND STEVE SMITH
STATE FOR EEB/ESC/IEC/ENR-DAVID HENRY, CBA
STATE PASS TO S/CIEA-DAVID GOLDWYN AND MICHAEL SULLIVAN
JOHANNESBURG FOR JASON NAGY
USDOE FOR GEORGE PERSON AND THOMAS SPERL
TREASURY FOR ANTHONY IERONIMO, ADAM BARCAN
DOC FOR 3317/ITA/OA/BURRESS AND 3130/USFC/OIO/ANESA/REED

E.O. 12958: N/A
TAGS: ENRG EPET EINV ETRD ECON NI

SUBJECT: S/CIEA GOLDWYN ENCOURAGES STRENGTHENING TRANSPARENCY
INITIATIVES IN NIGERIA'S EXTRACTIVE INDUSTRY

ABUJA 00002099 001.2 OF 003


-------
SUMMARY
-------


1. (SBU) Promoting transparency in Nigeria's energy industry was a
centerpiece of U.S. Coordinator for International Energy Affairs
(S/CIEA) David Goldwyn's visit to Nigeria November 9-11. Goldwyn
met with the Nigerian Extractive Industry Transparency Initiative
(NEITI) Chairman Professor Assisi Asobie and NEITI stakeholders to
discuss the findings of NEITI's most recent audit report (2005) and
the challenges and opportunities for strengthening transparency
initiatives in Nigeria. Goldwyn congratulated Nigeria for having
the NEITI process up and running with the involvement of
stakeholders and civil society organizations. The NEITI Chairman
identified lack of GON capacity and lack of GON cooperation with oil
producers in furnishing data as major hurdles, while also praising
the Yar'Adua administration for not having pressured NEITI so far.
The Chairman said the political will to fight corruption remains
shallow without executives of agencies and parastatals translating
Presidential declarations into action. The U.S. Coordinator urged
NEITI and civil society organizations to work together in devising
and conducting an effective communication and advocacy strategy for
the implementation of NEITI's audit recommendations. Goldwyn also
raised transparency issues in his meetings with government officials
throughout the trip. END SUMMARY.

--------------------------------------------- ------
CHAIRMAN ASOBIE DISCUSSES NEITI'S 2005 AUDIT REPORT
--------------------------------------------- ------

2. (SBU) U.S. Coordinator for International Energy Affairs, David
Goldwyn (S/CIEA) exchanged views with Chairman of the Nigerian
Extractive Industry Transparency Initiative (NEITI) Professor Assise
Asobie on strengthening transparency and good governance in the
Nigerian extractive industry on November 9. The discussions started
with Asobie outlining the outcomes of NEITI's recently released 2005
audit report on the Nigerian oil and gas sector. (Note: NEITI,
established in 2004, has conducted two audits: a combined one for
1999-2004 and a stand alone one for 2005. End Note). Asobie noted
that the findings of the 2005 audit were sIQbW4m the most important findings of the 2005
audit report as lack of Department of Petroleum Resources (DPR)
capacity to monitor and account for oil production and revenue
flows; lack of capacity by the Central Bank of Nigeria (CBN) and the
Nigerian Federal Inland Revenue Service (FIRS) to reconcile revenue
and production figures; lack of cooperation by federal agencies and
Qand production figures; lack of cooperation by federal agencies and
oil producers to share oil production and financial data; and
discrepancies between data maintained by the DPR and oil producers.
He complained that the Nigerian National Petroleum Corporation
(NNPC) and other GON entities frequently did not attend NEITI
meetings and sent low-level staff members when they did attend.

4. (SBU) Asobie said NEITI plans to conduct road-shows to publicize
the outcomes of its 2005 report and engage the public, an important
validation criterion under the Extractive Industry Transparency
Initiative (EITI) guidelines. Goldwyn queried if NEITI has a
communications plan to make this happen and Asobie replied that no
plan existed. Goldwyn said that effective communication remained
vital not only to get the 2005 audit report validated but also to
garner public support for NEITI's overall work. He recommended that
NEITI devise a simple communication plan and embark upon its
implementation. Asobie said NEITI is also exploring the possibility
of expanding its activities into the solid minerals sector, given
that each Nigerian state is blessed with such resources.

---------------------------------

ABUJA 00002099 002.2 OF 003


IMPLEMENTING AUDIT RECOMMENDATIONS
---------------------------------

5. (SBU) Goldwyn urged NEITI to focus on pressuring the government
and other stakeholders to implement its audit recommendations.
Incorporation by the Petroleum Industry Bill (PIB) of most of
NEITI's recommendations validated their importance. He suggested
that NEITI use the PIB to push the GON into action on the
recommendations. He said the DPR should demand the required data
from the companies that it regulates. Goldwyn encouraged NEITI to
lobby the GON for a specific budget for training of DPR staff and
purchase and installation of metering devices at well-heads, flow
stations, and terminals to monitor spillage and prevent theft. He
suggested sending a report to the Federal Executive Council
recommending installation of metering devices within a specified
period. Goldwyn encouraged NEITI to hold discussions on metering
devices both to show how such equipment can help fight spillage and
theft but also to press the GON to act upon NEITI's recommendations
on installing more devices. Implementing the NEITI recommendations
would improve compliance with EITI requirements and help NEITI
validate of its 2005 audit. Goldwyn promised to raise NEITI'S
concerns in his subsequent meetings with various GON stakeholders
and industry representatives.

--------------------------------------------- --
POLITICAL WILL TOO SHALLOW TO MAKE A DIFFERENCE
--------------------------------------------- --

6. (SBU) Asobie said he sees the GON's political will on
transparency as too shallow unless agency and parastatal executives
translated Presidential declarations on transparency into action.
Lack of a strong political opposition does not encourage the
government to respond to pressures for more openness. The
government is likely to yield to public pressure as the 2011
national elections approach, so civil society organizations need to
be more creative and consistent to get results, according to Asobie.
He said the Yar'Adua administration has not pressured NEITI up to
now, perhaps because the audits conducted so far have covered
periods before this government came to power. Asobie said the
2006-08 audit report, which could be conducted in 2010, will be a
real test of the administration's commitment to the EITI process.

--------------------------------------------- -------
NEITI SHOULD EXPAND TO STATES AND REACH OUT TO LABOR
--------------------------------------------- -------

7. (SBU) Goldwyn asked if states took up transparency initiatives.
Asobie responded that NEITI worked with Bayelsa State to introduce
transparency initiatives into the state's revenue and expenditure
structure. NEITI then planned to replicate the model in other
states. He reported that Kwara State Governor and Chairman of the
Nigerian Governors Forum Bukola Saraki has requested a presentation
QNigerian Governors Forum Bukola Saraki has requested a presentation
on NEITI's activities to the Governor's Forum, and NEITI hopes to
use that platform to promote the idea to the rest of the nation's
governors.

8. (SBU) Goldwyn inquired about NEITI's relations with the labor
unions. Asobie replied that labor unions have not been too
interested in NEITI's work to date because they have been engaged in
narrow fights over wage and benefit increases for their members. He
noted that professional associations, such as the lawyers'
association, are not supporting organizations like NEITI in the
fight against corruption. Goldwyn encouraged NEITI to reach out and
work with labor unions and professional associations, as both wield
significant clout within civil society.

-------------------------------------------
ROUNDTABLE WITH CIVIL SOCIETY ORGANIZATIONS
-------------------------------------------

9. (SBU) Goldwyn held a roundtable discussion on the NEITI process
with leaders of civil society organizations (CSO), Chairman Asobie,
and the World Bank's NEITI Coordinator on November 10. Goldwyn

ABUJA 00002099 003.2 OF 003


opened the discussion by stating that energy security represented a
core element of U.S. foreign policy and inviting attendees to air
their opinions on how the U.S. can help foster transparency and good
governance in Nigeria's oil and gas sector. Comments ranged from
lack of GON commitment to the NEITI process to lack of capacity
within the NEITI Secretariat and the CSOs themselves. Attendees
complained that the NEITI Act of 2007 gave the President of Nigeria
too much power, including appointing the CSO representative and the
rest of the NEITI governing board. One organization complained
about the lack of gender balance on NEITI's governing board (only
one female out of 15 members) and said that unless gender equality
is instituted real progress cannot be achieved. Some CSOs doubted
GON political will and commitment to transparency and good
governance and said the GON should desist from politicizing federal
agencies such as the DPR and FIRS by appointing politically
connected people who lack requisite qualifications. One CSO asked
what the U.S. is doing to help the NEITI process.

10. (SBU) Goldwyn responded that, as a follow-up to Secretary
Clinton's August visit to Nigeria, the U.S. and Nigeria are
developing a Bi-national Commission to collaborate on transparency
issues, among others. He added that the U.S. has committed $6
million in 2008 and 2009 to strengthen EITI initiatives globally,
which will help NEITI and the CSOs to build their capacity. Goldwyn
gave the attendees credit that the NEITI process is up and running
and that stakeholders and CSOs are on board with the process. He
advised them to build on this momentum and achieve results by
working together on a common communications and advocacy strategy to
implement NEITI recommendations. Asobie encouraged CSOs to exert
their influence on the NEITI process by actively participating as
observers in the National Stakeholders Working Group (NSWG). The
World Bank representative discussed the various capacity-building
measures it is implementing for all stakeholders, including the
CC3\QQi
Sec. Dr. Ochi Achi Niuv said the Ministry's budget office had
good cooperation with NEITI and praised the results of the first
audit. He was non-committal on the budgetary issue.

-------
COMMENT
-------

12. (SBU) Goldwyn's engagement with NEITI and the CSOs in a single
forum promoted frank exchanges and useful discussions among these
partners. His rapport with NEITI and the CSOs, stemming from his
previous work as consultant, enabled the USG to convey important
Qprevious work as consultant, enabled the USG to convey important
messages for promoting transparency and good governance in this
resource-rich and important country. The Mission hopes the
interaction between NEITI and the CSOs will lead to greater trust
and improved partnership. NEITI's plans to venture into the solid
minerals sector, while still saddled with three years of delinquent
audits, might be an unnecessary distraction at this point. END
COMMENT

13. (U) This cable has been cleared with S/CIEA.

SANDERS

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