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UNCLAS SECTION 01 OF 03 ABUJA 001827 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS TO USTR-AGAMA 
DOE FOR GPERSON, CHAYLOCK 
 
E.O. 12958: N/A 
TAGS: PGOV EAGR ETRD KDEM ECON EPET MOPS KTIP NI
SUBJECT: NIGERIA:  BI-WEEKLY POL/ECON UPDATES FOR AUGUST 16-31, 
2008 
 
¶1. (U) The following is a joint Embassy Abuja/ConGen Lagos 
compilation of August 16-31 political/economic highlights, which did 
not feature in our other reporting, covering: 
 
--Military, Security, and Bakassi 
--Economic and Business 
--Southern Political 
--Oil and Gas 
--Other News 
 
------------------------------ 
Military, Security, and Bakassi 
------------------------------- 
 
¶2. (U) On August 25, the Nigerian Senate said it would "continue to 
work on" the ratification of the Green Tree Agreement, despite the 
fact that the final handover of the peninsula occurred August 14. 
Deputy Senate Leader Victor Ndoma-Egba said that the Senate Joint 
Committee on Foreign Affairs, Judiciary, States and Local Government 
would continue to scrutinize the treaty, and would produce a report 
recommending what actions the Senate should take. 
 
¶3. (U) Twenty eight military officers who returned in April 2008 
from serving in the United Nations peacekeeping force in Liberia are 
suing the Nigerian Army over their alleged unlawful detention. 
Seeking immediate release and 30 million naira in damages, they say 
that after a two-week wait at Akure Barracks they were denied their 
$6000 each allowance, made to return to their home base, and then 
were summoned to return the next month merely to be offered only 
$3000.  Upon complaining, they were arrested and have been held 
since July 5.  Included as a respondent in the suit is new Chief of 
Army Staff Major General A. B. Dambazau, who, upon assuming his new 
position, promised to stamp out insubordination and disrespect in 
the ranks.  Some observers believe the lawsuit is a result of 
soldiers' expectations of better treatment in a hopefully 
increasingly professional Nigerian military. 
 
--------------------- 
Economic and Business 
--------------------- 
 
¶4. (SBU) Foreign Agricultural Service Lagos reports that two major 
rice importers are filling their warehouses with the product in 
advance of a possible re-imposition of a 109% tariff on imported 
rice.  Despite newspaper reports of some importers hoarding 
duty-free rice in hopes of reaping a windfall, these two importers 
claim they do not expect the GON to re-impose the tariff on imported 
rice until early 2009 at the earliest and say they are pushing for a 
30% tariff, or none at all, given the still high global rice price. 
(Note: The GON temporarily suspended its 109% tariff on imported 
rice in May.  The suspension is due to expire October 31.  End 
Note.) 
 
¶5. (SBU) According to Costal Inland Marine Services (CIMS), a 
subsidiary of U.S.-based Trico Marine, maritime companies in the oil 
service industry have adopted self-help measures at tremendous cost 
to counter piracy in Nigeria's coastal water.  The companies, 
organized through the Marine Industrial Service Consultative 
Organization (MISCO), have recently agreed to move their service 
vessels in convoys and restrict movements to daylight hours.  The 
threat of piracy has kept many companies from signing contracts. 
CIMS said the industry is concerned about the bureaucratic and 
financial constraints facing the Nigerian Maritime Administration 
and Safety Agency (NIMASA) and the efficacy of the Nigerian Navy's 
patrols. 
 
¶6. (SBU) Mrs. Bola Kupolati of the Nigerian Department of Fisheries 
told Lagos Poloff on August 25 that piracy has become a serious 
problem for the Nigerian fishing fleet.  The fleet, 90% of which is 
based in Lagos, did not leave port from April to the end of June 
after pirate attacks on fishing trawlers resulted in the deaths of 
several fishermen.  Some of the fishing fleet risked going to sea 
again in July and August after promises of better protection from 
the Nigerian Navy, but according to Kupolati the pirates are better 
armed than the Navy patrol boats and the Navy is more interested in 
interdicting illegal bunkering than protecting fishermen. 
 
¶7. (SBU) A $350 million tourist complex, including a shopping 
center, movie studios and entertainment park built in the jungle 
 
ABUJA 00001827  002 OF 003 
 
 
near Calabar, Cross River State, remains closed.  Although the main 
buildings and infrastructure are complete, the complex has yet to 
open because the necessary law permitting a planned retail 
free-trade zone has not been published.  According to Daniel 
Ologunleko, the Deputy General Manager of the Tinapa free trade 
zone, the resort is expected to open in December.  Ologunleko said 
the resort had contracts with several retailers, notably Shop-Rite 
from South Africa, and added that it would welcome American 
retailers such as Wal-Mart.  The existing Tinapa complex also 
remains stymied due to policy and procedural issues. 
 
¶8. (SBU) At a time when the international shipping community is 
facing a severe shortage of trained seafarers to man an expanding 
fleet, the Maritime Academy of Nigeria (MAN) remains incapable of 
training Nigerians to the standards necessary to qualify for these 
jobs.  MAN, located in Oron, Akwa Ibom State, lacks a training 
vessel, computers, internet access for students, simulator 
facilities, and equipped laboratories.  Only 13% of the staff is 
qualified as either a master mariner or chief engineer.  One third 
of the staff has no experience at sea whatsoever.  Graduates of the 
two year basic course or the three year "advanced" course cannot 
meet international standards required of seafarers. 
 
¶9. (SBU) After 50 years in Nigeria, Panalpina World Transport 
(Nigeria) Ltd., a subsidiary of Swiss-based Panalpina, an 
international provider of forwarding and logistics services, will 
sell its operations to Nigerian owners by September 30.  The 
decision to sell resulted from the ongoing investigation into 
possible violations of the Foreign Corrupt Practices Act (FCPA) by 
Panalpina USA.    The new company will be launched in early October, 
and will retain 200 of the 700 local employees, including expatriate 
staff. 
 
----------- 
Oil and Gas 
----------- 
 
¶10. (SBU) A senior U.S. oil company executive told the Charge' 
d'Affaires on August 28 that the Yar'Adua administration has 
finished drafting legislation on comprehensive oil sector reform, 
and has sent it to the legislature for consideration.  (Note: U.S. 
oil company government relations contacts say they have not yet seen 
a copy of the proposed legislation.  End Note.)  The executive 
estimated reforms would not begin before Jan 1, 2010.  He disputed 
the GON's claims that the legislation was the result of a dialogue 
with the oil industry, describing the relationship as "at best two 
monologues."  The executive said oil companies will not make 
investment decisions in multi-billion dollar projects while so much 
uncertainty surrounds the future of the Nigerian oil sector. 
(Comment:  Policy and security uncertainty are already deterring 
investors.  Final investment decisions on the Brass and OK liquefied 
natural gas plants have been delayed and the investor response to 
Nigeria's gas master plan has been underwhelming.  The lead oil 
sector analyst of a major U.S. investment bank told EnergyOff on 
August 22 that "Nigeria isn't even on the investment radar screen." 
End Comment.) 
 
¶11. (SBU) ExxonMobil and the Nigerian National Petroleum Corporation 
signed an agreement on August 31 to begin planning a gas to liquids 
plant in Akwa Ibom State.  The plant would convert natural gas to 
diesel and naphtha.  Billed in the local press and Reuters as a 
solution to Nigeria's need to import gasoline, the agreement is 
simply an agreement to begin planning.  The project is far from the 
final investment decision stage.  As a point of comparison, Chevron 
began feasibility studies for its Escravos gas to liquids plant in 
¶1998.  On May 18 Sasol, Chevron's partner in the Escravos plant, 
announced it was reviewing its participation in the project as costs 
soared to $6 billion and the completion date was pushed back until 
¶2011. 
 
------------------ 
Southern Political 
------------------ 
¶12. (SBU) Kidnappers who abducted the chairman of the Ondo State Oil 
Producing Area Development Commission (OSOPADEC), Chief Adewale 
Omojuwa, and six OSOPADEC commissioners on August 21 were trying to 
extort money from OSOPADEC, Dele Atunbi, Chairman of the Ondo 
Chapter of the Nigerian Union of Journalists, told PolSpec August 
¶25.  Atunbi said that criminal/militant activities have been on the 
 
ABUJA 00001827  003 OF 003 
 
 
increase in Ondo riverine area, led by restive youth seeking 
relevance and easy money, particularly through kidnapping. 
---------- 
Other News 
---------- 
 
¶13. (SBU) Cordelia Ebiringa, Deputy Superintendent of Immigration 
and head of the Trafficking in Persons Unit of the Cross Rivers 
State Command of the Nigerian Immigration Service, told Poloff 
August 19 that her unit is under-funded and under-trained.  Ebiringa 
stressed that slavery is "endemic" in Cross River State and widely 
tolerated.  The most common victims of the trade are children and 
young women.  Although Ebiringa said she had no statistics to back 
her up, anecdotal evidence suggested that major international 
trafficking networks involved Nigerians along all segments of the 
route.  Internal slavery, however, is also a major problem, with 
children from Cross Rivers being taken to the Southwest to work on 
plantations or as domestic help.  Ebiringa praised the American Bar 
Association, which had brought experts to Nigeria in June for a 
seminar on Trafficking in Persons which was attended by Nigerian 
officials from a variety of agencies. 
 
¶14. (SBU) Governor Christopher Alao-Akala of Oyo State paid a 
courtesy call on the Lagos Consul General on August 27. The Consul 
General shared information about the Foreign Commercial Service with 
Alao-Akala, who mentioned two Americans who are active in the Oyo 
business community; one is involved with a waste-to-ethanol project, 
and the other is pursuing work in the free trade zone outside 
Ibadan.  Alao-Akala told the Consul General he was slated to travel 
on September 1 with Vice President Goodluck Jonathan to Zambia for 
the Presidential Funeral. (Note: the Vice President did not attend 
due to President Yar'Adua's absence from Nigeria. End Note.) 
 
PFLAUMER