VZCZCXRO1097
PP RUEHMA RUEHPA
DE RUEHUJA #2243/01 3191218
ZNR UUUUU ZZH
P 141218Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4447
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 0255
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 002243 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS TO USTR-AGAMA, USTDA-FITTS/MARIN, EXIM-RICHTER 
PASS USAID AFR/SD FOR MICHAEL CURTIS 
DEPT OF ENERGY FOR CAROLYN HAYLOCK AND GEORGE PERSON 
 
E.O. 12598: N/A 
TAGS: EPET ECON ENRG PGOV EAID ETRD EFIN EINV NI
SUBJECT: U.S. Mission Partners with American Business on Energy 
Issues 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE USG 
 
¶1. (SBU) SUMMARY U.S. Mission in Nigeria is working with the 
American Business Council (ABC) to operationalize a public-private 
partnership on energy issues and other economic and business issues. 
 The Ambassador opened a recent meeting with ABC with a review of 
progress to date, which includes a big step in influencing reforms 
in the trade regime and the elimination of almost half of all import 
bans.  She said that she looked forward to working even more closely 
with ABC to ensure continued economic growth in Africa's most 
populous country, while opening further opportunities for U.S. 
businesses.  Discussions in the working segment of the meeting 
included ABC's thoughts on pending local content legislation.  ABC 
members said the current global financial crisis will shelve 
development projects that the international oil companies (IOC) were 
planning in the near-term as well as exploration due to the credit 
crunch, security, budget cuts, and failure of Government of Nigeria 
to pay monies owed to joint ventures.  The proposed local content 
bill has had its second reading in the House and is now before the 
Upstream Petroleum Committee.  ABC wants to ally with U.S. Mission 
in working with regulatory authorities and the Power and Gas 
Ministries to support progress on electric power generation. The 
Nigerian Extractive Industries Transparency Initiative is moving 
forward to assess state of measurement of petroleum resources.  END 
SUMMARY. 
 
¶2. (SBU) Ambassador Sanders opened U.S. Mission meeting with the ABC 
at the Embassy on October 21.  In her welcome remarks the Ambassador 
emphasized the need to operationalize the ongoing cooperation 
between USG Team Nigeria and the ABC. The two teams, she continued, 
worked closely together in the runup to last December's TIFA 
Council.  The partnership has already netted results, including 
reforms in the tariff regime and the elimination of almost half of 
all import bans. The Ambassador noted the meeting's agenda focused 
on energy issues critical to Nigeria's economic success and hopes 
for broad-based development.  She said that she looked forward to 
working even more closely with ABC to ensure continued economic 
growth in Africa's most populous country, while opening further 
opportunities for U.S. business. 
 
¶3. (SBU) Econ Counselor opened the working session of the meeting, 
focused on energy issues--local content and electricity challenges 
in particular.  In addition he said that the USG Team would like to 
get ABC's input towards a measurements study about to be tendered by 
the Nigerian Extractive Industries Transparency Initiative (NEITI) 
as part of its mandate to ensure accountability for resource 
revenues.  One ABC representative, a founding board member of NEITI, 
said he finds forward progress of the organization stalled and in 
need of an infusion of recognized leadership that could keep up 
momentum. 
 
¶4. (SBU) The discussion on the local content issue was informative, 
with participation by all in attendance.  It was noted that American 
companies around the world typically favor the development of local 
content including as a contributor to cost reduction and 
profitability.  At the moment, the Nigerian House of Representatives 
is reviewing a Senate Bill which would mandate high percentages of 
local content in many services categories, to a degree which could 
impede oil and gas production.  A senior official with a support 
services company mentioned that the Nigerian National Petroleum 
Company (NNPC) has already begun listing bid packages with the 
notation that only indigenous companies can bid, so ownership is now 
an issue as well as content.  The group felt that there is personal 
rent seeking going on--a motivation for some who may try to move the 
consensus back towards state domination of the economy. 
Additionally, projects that the international oil companies (IOC) 
were planning in the near-term may be put back on the shelf due to 
the credit crunch, security, budget cuts, and failure of NNPC to pay 
money owed to joint ventures. 
 
¶5. (SBU) ABC plans to work on a position paper on the electricity 
challenge to the business community and the economy.  Econ Counselor 
said that the U.S. Mission looked forward to working with ABC to 
advise regulatory, power and gas officials on terms and conditions 
needed to boost the investment in power generation. Also, the 
Mission looked forward to ABC's comments on the terms of reference 
for the NEITI measurements study, and how we can support our 
companies' interests while assisting NEITI in fulfilling its 
important mandate. 
 
CURRENT DEVELOPMENTS 
------- 
 
¶13. (SBU) A senior official of the Office of the Clerk of the House 
told Econ Counselor at November 4 election watch event that the 
 
ABUJA 00002243  002 OF 002 
 
 
pending local content bill has had its second reading before the 
House and has been sent to the Upstream Petroleum Committee for 
consideration.  Hearings have not yet been scheduled.  At November 5 
post-election reception at the CMR, NEITI Executive Secretary told 
Econ Counselor that NEITI has put out advertisements for expressions 
of interest to conduct the measurements study.  In discussions with 
Econ Counselor November 11-13, service company and IOC reps said 
they believed that NNPC and the Executive Branch favored an approach 
on local content that allowed for administrative discretion rather 
than legislated line-item quotas.  At the same time, they recognized 
the need to engage with the House on the current bill.  The 
newly-formed Lagos based service companies group is putting together 
a new set of comments for the House that incorporate points from 
construction companies supporting oil and gas exploration and 
development projects. 
 
¶9. (U) This cable was coordinated with Consulate Lagos. 
 
SANDERS