VZCZCXRO7878
PP RUEHMA RUEHPA
DE RUEHUJA #1942/01 2771159
ZNR UUUUU ZZH
P 031159Z OCT 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4071
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 0014
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 001942 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS TO USTR- AGAMA AND USTDA - FITTS/MARIN 
DEPT OF ENERGY FOR CAROLYN HAYLOCK AND GEORGE PERSON 
USAID AFR/SD FOR MICHAEL CURTIS 
 
E.O. 12598: N/A 
TAGS: EPET ENRG ECON PGOV EAID PREL NI
SUBJECT: NIGERIA: USG COLLABORATES WITH WORLD BANK & DFID TO ASSIST 
GAS SECTOR 
 
REF: A. ABUJA 1930 
      ¶B. ABUJA 1563 
      ¶C. ABUJA 1311 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE USG 
 
¶1. (SBU) SUMMARY. Ambassador Sanders met with the Minister of Energy 
(Gas) Odusina on September 25 and offered U.S. support to assist 
with implementing the GON's gas policy, master plan, and pricing 
formula, funded through the Africa Infrastructure Program (AIP) 
program funded and managed by USAID.  This assistance follows months 
of discussions among the USG, World Bank, and the United Kingdom's 
Department for International Development (DFID).  The international 
community has pooled expertise and budgets to reach out to the GON 
to provide a successful way forward toward the implementation of the 
GON's gas policy and plan.  The assistance focuses on a solution to 
the immediate problem of a significant shortfall of gas for domestic 
utilization.  The shortfall is seen to directly threaten the 
economic aspirations of the nation, due to lack of electric power 
and feedstock for industry.  The assistance will be coordinated with 
complimentary programs of the World Bank and DFID.  END SUMMARY. 
 
¶2. (SBU) On September 25, the Ambassador, AIDOff and consultant, and 
EconOff, met with the Minister of Energy (Gas) Odusina to discuss 
the Minister's plans for the gas sector. The Minster explained that 
oil was discovered in Nigeria in 1955, but there had been no serious 
discussion about gas until the past two years when the need for 
domestic gas became critical.  He continued by illustrating that 
Nigeria's forecast for natural gas requires it to grow from a level 
of 4 billion cubic feet per day (bcf/d) to about 20 bcf/d by 2010. 
In the short term, he said the demand growth is underpinned largely 
by the power sector crisis and by an increasing requirement by large 
industries such as fertilizer and methanol. The government of 
Nigeria (GON) has been unable to meet demand via existing gas 
policies and the gas master plan.  Currently, the GON has mandated 
gas, through regulation, from the international oil companies 
(IOC). 
 
¶3. (SBU) The Minister expects, through its gas master plan, that 
Nigeria will become a major player in the international gas market 
as well as laying a solid foundation for the expansion of gas supply 
infrastructure within the domestic market.  (NOTE: Since coming into 
office in May 2007, President Yar'Adua has given approval to 
guidelines aimed at realizing this vision through its gas master 
plan.  The plan's Blueprint was approved by the Federal executive 
Council in February 2008.  The mandated (regulated) gas supply 
obligation was transmitted to the Joint Venture Companies in August 
2008 requiring implementation of the gas obligation for the domestic 
market to begin no later than October 15, 2008 (reftel A).  The 
GON's policy has not been received well by IOCs and other investors 
to-date. END NOTE) 
 
¶4. (SBU) The discussion between the Minister and the Ambassador led 
to agreement to expand U.S. cooperation through USAID's newly 
launched Sub-Saharan Africa Infrastructure Program (AIP).  The 
cooperation will begin in October 2008. (NOTE: AIP is part of the 
$200 million five-year U.S. Presidential African Global 
Competitiveness Initiative, which seeks to expand trade between 
Nigeria and the U.S. and other trade partners.  The primary goal of 
the AIP is to foster over $1.0 billion of investments in 
infrastructure throughout sub Saharan Africa within the next few 
years. END NOTE). 
 
¶5. (SBU) Prior to the Ambassador's meeting with Minister Odusina, 
USAID, and EconOff met with the Ministry's technical experts to 
discuss Nigeria's gas master plan and the current situation in the 
gas industry.  Following this meeting USAID met with the World Bank 
and the DFID to discuss a joint effort to provide technical 
assistance to Nigeria. Agreement was reached on the critical needs 
of Nigeria's energy sector and how USAID, World Bank, and DFID could 
jointly assist.  The Ambassador shared this information with the 
Minister explaining that the task of Nigeria's implementation of its 
gas plan was bigger than any one entity could tackle alone. 
 
¶6. (SBU) COMMENT: Domestic gas quantities are inadequate for 
existing electricity power plants and not available for the new 
plants (NOTE: three of ten new plants are commissioned and do not 
have gas to operate END NOTE).  In May 2008, the Embassy discussed 
the problems with the World Bank and asked if it would lead an 
energy committee of all donors and stakeholders to determine both a 
consensus and priority of need and how the international community 
could reach out to the GON in a coordinated effort. The World Bank 
embraced this idea and launched the Energy Sector Partners 
Coordination Forum.  This is the platform that allowed the 
 
ABUJA 00001942  002 OF 002 
 
 
coordinated approach to provide support to the gas sector policy 
challenges. END COMMENT. 
 
This cable is coordinated with Consulate Lagos. 
 
PIASCIK