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UNCLAS SECTION 01 OF 04 ABUJA 001695 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS TO USTR-AGAMA 
DOE FOR GPERSON, CHAYLOCK 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM ECON EPET MOPS NI
SUBJECT: NIGERIA:  BI-WEEKLY POL/ECON UPDATES FOR AUGUST 1-15, 2008 
 
¶1. (U) The following is a joint Embassy Abuja/ConGen Lagos 
compilation of August 1-15 political/economic highlights, which did 
not feature in our other reporting, covering: 
 
--Elections 
--National Assembly 
--Economic and Business 
--Oil and Gas 
--Other News 
 
-------------------------------------------- 
Election Tribunals, Election Reform 
-------------------------------------------- 
 
¶2. (U) ELECTION COMMITTEE TERM EXTENDED.  At the request of the 
Electoral Reform Committee (ERC), President Yar'Adua extended its 
tenure by four months.  The committee will now submit its report in 
December.  The Guardian newspaper reported on August 13 that the 
committee chairman, former Chief Justice of Nigeria, Muhammadu 
Uwais, said the committee requested more time because Nigerians 
"bombarded" the panel with memoranda.  He said the extension will 
enable the ERC to complete its work. 
 
¶3. (SBU) ELECTION REFORM COMMITTEE TELLS OF PLANS.  ERC members told 
Lagos Poloff on June 18 that the ERC report will recommend an 
Independent National Electoral Commission with separate funding, an 
improved voter registration process, a modified open secret ballot 
voting process and more democratic political parties.  One member 
commented that non-democratic political parties are 80 percent of 
the problem and the ERC cannot fix them under current law. 
 
¶4. (U) ELECTION HEARINGS DRAW AUDIENCE.  The June 16-18 ERC hearings 
in Owerri, Imo State, drew a wide variety of presenters, including 
the former governor of Abia State, Orji Kalu, and the former and 
current governors of Imo State.  Current Governor Ikedi Ohakim 
(Peoples' Progressive Alliance) of Imo gave the opening address, 
simultaneously praising President Yar'Adua for convening the ERC and 
condemning "incorrigible" Nigerian politicians for causing crime and 
arming thugs to win elections. 
 
----------------- 
National Assembly 
----------------- 
 
¶5. (SBU) LEGISLATURE SETS UP COMMITTEE TO STUDY NIGER DELTA.  The 
Guardian newspaper reported on August 13 that the House of 
Representatives will establish an ad hoc committee on the Niger 
Delta crisis to hold public hearings on the issue.  While some 
question the impact of such a committee, House members claim this 
approach is novel and the results will be brought to the full House 
which will then pass them to the President for implementation. 
(Comment:  This approach is not novel; countless legislative 
committees to investigate a variety of issues have been announced in 
the past year.  The result is typically a few weeks of newspaper 
headlines and little else.  End Comment.) 
 
--------------------- 
Economic and Business 
--------------------- 
 
¶6. (U) CLINTON FOUNDATION TO ASSIST LAGOS WITH WASTE MANAGEMENT.  At 
an investment forum in Lagos on August 6 the Managing Director of 
the Lagos State Waste Management Agency reported that the Clinton 
Foundation will provide $36 million to improve waste management in 
the state.  The Clinton Climate Initiative is working with four 
large cities in Africa: Lagos, Addis Ababa, Cairo, and Johannesburg, 
to reduce greenhouse gas emissions through energy saving, building 
retrofits, waste management programs and other measures. 
 
¶7. (U) NIGERIAN AGENCY DESTROYS COUNTERFEIT DRUGS.  The National 
Agency for Food and Drug Administration and Control (NAFDAC) 
destroyed counterfeit drugs, substandard food and other fake 
products valued at $2.1 million in Gombe State in early August. 
Dora Akunyili, NAFDAC Director General, told the media the main 
purpose of the destruction exercise was to prevent counterfeit drugs 
and substandard products from finding their way into the homes of 
innocent and unsuspecting customers. 
 
¶8. (U) REMITTANCES AND THE NIGERIAN DIASPORA.  Commercial banks 
reported that in 2006, remittances for overseas Nigerian were 
 
ABUJA 00001695  002 OF 004 
 
 
estimated at $4.2 billion dollars, representing 700,000 transactions 
and a 30 percent increase from 2005.  The overwhelming majority of 
remittances came from the United States, UK, and Italy.  Nigerian 
banks are encouraging recipients of remittances to invest a portion 
of the money, instead of consuming it all.  Nigerians in Diaspora 
Organization, Europe (NIDOE) has set up a $200 million Diaspora 
Investment Fund, and PHB Asset Management Limited, a subsidiary of 
Bank PHB, manages the account. 
 
¶9. (U) CIVIL AVIATION UPDATE.  On August 4, the Ministry of 
Transportation directed Virgin Nigeria Airways (VNA) to relocate its 
operations from the international wing of Murtala Mohammed 
International Airport (MMIA) to the new domestic terminal by August 
¶11.  (Note: The two terminals are on opposite sides of the airfield 
and are not physically connected.  A cumbersome shuttle service is 
in place to move passengers making connecting flights.  End Note.) 
On August 9, the Minister of Transportation directed aviation 
authorities to ground all domestic flights departing from MMIA. 
Richard Aisuebeogun, Managing Director of the Federal Airports 
Authority of Nigeria told EconOff on August 5 that VNA had been 
given every chance to relocate to the new domestic terminal.  As a 
result of the directive, all VNA domestic flights were suspended 
August 12-13 while VNA moved its operations to MMA2.  Chairman of 
Virgin Group Richard Branson denounced the GON's heavy-handed 
approach and questioned the country's ability to attract foreign 
investment.  On August 13, the Federal Executive Council reversed 
the relocation directive, but VNA decided to continue its domestic 
operations out of MMA2 pending a court hearing in October. 
President Yar'Adua warned VNA on August 17 against waging "negative 
media campaigns" against the government. 
 
¶10. (SBU) Nigeria's Accident Investigation Bureau (AIB) investigator 
Captain Muhtar Usman told EconOff that AIB is working with the U.S. 
National Transportation Safety Board (NTSB) to complete the 
investigation of an incident involving a Chanchangi Boeing 737 which 
ran off the runway at Port Harcourt International Airport on July 
¶14.  Nigeria is bringing the Flight Data Recorder and Cockpit Voice 
Recorder to the NTSB Headquarters in Washington DC on August 25 for 
analysis. 
 
¶11. (SBU) CENTRAL BANK REVERSES DECISION.  On August 5, the Central 
Bank of Nigeria (CBN) decided to rescind the December 2009 common 
year-end requirement for banks, leaving it to the discretion of the 
banks.  The requirement would have required all banks to use the 
calendar year as the fiscal year for accounting purposes.  Banks 
currently uses a variety of fiscal years, making comparisons 
difficult and allowing the banks to massage their accounting numbers 
at the end of the year.  Bismarck Rewane, Managing Director of 
Financial Derivatives, said the reversal of the common year-end 
requirement signifies the rapidly waning influence and weakening 
position of CBN Governor Chukwuma Soludo. 
 
¶12. (SBU) BUSINESS ENVIROMENT IN LAGOS DETERIORIATING.  On August 8, 
officials from three U.S. manufacturers, Pfizer, Motorola, and 
Coca-Cola, told Consul General and EconOffs that unpredictable 
power, the rising cost of fuel to power generators, increasingly 
hostile policies adopted by Lagos State Government (LASG), and poor 
security have prompted many companies to consider moving their 
operations to Abuja.  Pfizer downgraded Nigeria from being the 
company's regional headquarters and has set up a reporting and 
evaluation structure for Nigeria separate from the rest of West 
Africa, given the rising costs and risks of operating in Lagos.  The 
Coca-Cola official said the company may stop producing syrup in 
Nigeria because of rising costs.  All three companies said they have 
considered moving to Abuja, but a lack of skilled manpower in Abuja 
and concentration of customers in Lagos are two primary reasons 
keeping manufacturing companies in Lagos. 
 
¶13. (U) On August 13 the Lagos State Government presented a new 
infrastructure master plan for its Lekki sub-region.  The plan calls 
for a 10,380 hectare Lekki City to check the haphazard development 
currently going on in the Lekki corridor.  The plan highlights the 
provision of electricity, roads, and waste management as priorities 
for the new city.  According to Lagos State Governor Fashola (who 
attended the presentation), the new area will be have areas zoned 
for commercial, light industrial, residential, tourism, and 
environmental conservation use.  (Comment: The plan, though 
laudable, is a massive project that will require serious government 
commitment.  Governor Fashola's administration has a poor track 
record on following through on its plans, and has yet to start on 
 
ABUJA 00001695  003 OF 004 
 
 
other projects, like the Fourth Mainland Bridge, promised during 
last year's election.  End comment.) 
 
----------- 
Oil and Gas 
----------- 
 
¶14. (U) SALE OF TEXACO ON HOLD.  A local paper reports that Zenon 
Petroleum, a Nigerian downstream company, obtained a temporary 
injunction from a Nigerian federal court halting Chevron's sale of 
its Texaco downstream subsidiary.  Chevron owns 60 percent of 
Texaco, which operates 381 gasoline stations throughout Nigeria. 
(Note: Texaco is 40 percent Nigerian-owned, the result of a 1978 
decree mandating increased Nigerian participation in local 
businesses.  End Note.)  Zenon, which owns 19 percent of Texaco, has 
sought to block the deal, which it says will leave the new company 
with too much debt and will endanger minority shareholders.  The 
proposed sale by Chevron has attracted interest from Zenon's top 
rivals, Oando Plc and African Petroleum. 
 
¶15. (SBU) REPORTED ATTACK ON NATURAL GAS PIPELINE.  Reuters reported 
that militants destroyed part of a Nigerian National Petroleum 
Corporation (NNPC)-owned natural gas pipeline in Rivers State on 
August 10.  A spokesman for the "militant" umbrella group MEND told 
Reuters that a MEND "diving unit" was responsible for the operation. 
 In the press, a NNPC spokesman could not confirm an attack on its 
pipeline and speculated that a pipeline serving the Bonny Nigeria 
Liquefied Natural Gas (NLNG) plant may have been the target. 
However, a contact at NLNG told EnergyOff that none of its supply 
pipelines had been attacked and the company was operating normally. 
 
¶16. (SBU) NIGERIA'S OIL RESERVES FALL.  In a public statement on 
August 15, NNPC Group Managing Director Abubakar Yar'Adua said 
Nigeria's proven oil reserves stand at 33.6 billion barrels. 
(Comment: The wire service Agence France-Presse reported this as a 
12 percent increase in Nigeria's reserves over the previous year, 
but on the Energy Information Agency's website, Oil and Gas Journal 
estimates Nigeria's 2007 proven reserves at 36.2 billion.  That 
would make the claimed 33.6 billion barrels a seven percent decrease 
in reserves.  NNPC-generated briefs seen by EnergyOff have typically 
put Nigeria's reserves at 36 billion barrels.  Instead of 
progressing toward its stated goal of increasing proven oil reserves 
to 40 billion barrels by 2010, Nigeria is seeing its reserves 
dwindle because of ongoing violence, a lack of investment, and 
NNPC's cumbersome contracting process.  End Comment.) 
 
¶17. (U) PIPELINE REPAIRS DELAYED.  A Shell spokesman acknowledged 
that ongoing violence in the Niger Delta is preventing the company 
from repairing a crucial oil pipeline damaged in a militant attack 
earlier this summer.  The pipeline, located in Rivers State, is a 
trunk line that feeds oil from onshore fields to Shell's Bonny 
export terminal.  Shell maintains force majeure on a portion of its 
exports of Bonny Light crude oil due to the outage. 
 
¶18. (U) ILLEGAL REFINERIES IN NIGER DELTA.  Various Nigerian 
newspapers report that units from the Joint Task Force have 
uncovered about 200 "illegal refineries" operating in the swamps in 
Rivers State.  While details are scarce, the press is reporting that 
the refineries make gasoline and diesel for sale to local consumers. 
 (Comment:  Mission has not been able to confirm the reports.  While 
there are good reasons to be skeptical of the stories, if true they 
would be an interesting example of oil thieves expanding their 
business from midstream to downstream.  End Comment.) 
 
¶19. (SBU) KEROSENE SCARCE AFTER PROMOTION.  Predictable flaws in 
African Petroleum's (AP) plan to sell kerosene for 50 naira/liter 
have emerged.  Press reports abound of kerosene shortages at AP gas 
stations as black marketers rush to buy the cheap fuel (which 
typically sells for 65-150 naira per liter at legitimate retail 
outlets) and resell it on the street.  An AP gas station manager in 
Lagos told EnergyOff that his station has not had kerosene for 
weeks, although lines of hopeful customers still form at the 
kerosene pumps.  Because of the lack of electricity and increasing 
shortage of firewood, kerosene is widely used for cooking and 
lighting.  (Comment:  It has never been clear who or what was behind 
AP's sale of kerosene.  President Yar'Adua publicly lauded the 
promotion and encouraged other downstream companies to follow AP's 
example.  Unlike gasoline, the price of kerosene is largely 
deregulated.  Whether AP is receiving an unofficial subsidy from the 
GON is uncertain.  What is certain is that the black marketing was 
 
ABUJA 00001695  004 OF 004 
 
 
an inevitable result of AP's promotion.  End Comment.) 
 
----------- 
Niger Delta 
----------- 
 
¶20. (SBU) NDDC COMMITTEE MEMBERS SEES NEED FOR A CRACKDOWN.  Justin 
Rewane of the President's Monitoring Committee of the NDDC told 
Lagos PolOff in a meeting August 4 that militants were essentially 
gangsters and they needed to be "taken out."  Rewane favored a 
military solution to the militants saying, "After Odi, we had 
peace."  (Note:  The reference is to the destruction of the village 
of Odi by the Nigerian military in 1999.  End Note.)  He added that 
as long as the militants were paid off, they would remain powerful, 
intimidating peaceful inhabitants of the Delta.  Rewane also 
theorized that the militants were threatening German construction 
company Julius Berger to prevent the construction of roads in the 
Niger Delta; roads, he said, could be used by the military to attack 
the militants.  According to Rewane "Once you have roads, it will be 
the end of the militants. If there are no militants, there will be 
no illegal bunkering."  (Comment:  Justin Rewane is the brother of 
prominent Nigerian businessman Bismark Rewane.  His views on how to 
solve the problem in the Niger Delta are decidedly antiquated and 
hopefully do not reflect the wider views of the monitoring 
committee.  End Comment.) 
 
---------- 
Other News 
---------- 
 
¶21. (U) GON NEGLECTS FEMALE EDUCATION.  During a two-day national 
conference on girls' education held in Kaduna State on August 13-14, 
the Minister for Education acknowledged that the Federal Government 
has paid relatively little attention to vulnerable groups, including 
female children.  She noted that the in the North girls are far 
behind boys in terms of enrollment and completion of education.  She 
identified inaccessibility, geographic disparities, and funding as 
dimensions to the problem.  The governor of Kaduna State said 
poverty, early marriage, teen pregnancy, inadequate facilities, and 
misinterpretation of Islamic and cultural tenets inhibit girls' 
education.  The conference commended some states for the 
establishment of "Second Chance Schools" which provide educational 
opportunities for young mothers and women who wish to re-enter 
school after dropping out at an ealier age. 
 
PIASCK