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