VZCZCXRO0168
RR RUEHMA RUEHPA
DE RUEHOS #0101/01 0640633
ZNR UUUUU ZZH
R 050633Z MAR 09
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0559
INFO RUEHUJA/AMEMBASSY ABUJA 0178
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 02 LAGOS 000101 
 
SENSITIVE 
SIPDIS 
 
COMMERCE FOR KBURRESS 
ENERGY FOR PERSON, GAY 
TREASURY FOR DPETERS, RHALL, RABDULRAZAK 
STATE PASS USTR FOR LISER, AGAMA 
STATE PASS TRANSPORTATION FOR KSAMPLE 
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS 
STATE PASS TDA FOR EEBONG, DSHUSTER 
STATE PASS EXIM FOR JRICHTER 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV NI
 
SUBJECT: NIGERIA: OGUN STATE FREE TRADE ZONE PROJECTS STALLED 
 
REF: A) 08 LAGOS 7 
      B) 07 LAGOS 794 
 
¶1. (SBU) Summary: The free trade zone (FTZ) projects in Ogun State, 
southwest Nigeria appear stalled by the global financial crisis and 
ongoing political wrangling in the state. EconSpec's visit to the 
Kajola Specialized Railway Industrial FTZ and the Ogun-Guangdong FTZ 
on February 23 revealed no construction was going on at either site. 
Although the state government has earmarked naira 25.86 billion 
(USD172 million) or 26 percent of its 2009 budget for its key 
economic projects, including the FTZs, and plans to raise naira 27 
billion (USD180 million) from the capital market, it is not likely 
Governor Daniel's administration will achieve much before it expires 
in 2011.  End summary. 
 
Kajola Railway FTZ Bare 
----------------------- 
 
¶2. (U) Almost two years after former President Obasanjo approved the 
Free Trade Zone (FTZ) at Kajola in Ifo Local Government Area of Ogun 
State, the FTZ site lies bare. Designed to integrate the federal 
government's railway modernization project with Ogun state's plans, 
the Kajola Specialized Railway Industrial FTZ, approved in May 2007, 
was to be constructed by the Chinese Construction Engineering 
Company (CCEC) as a railway hub for easy transportation of raw 
materials and finished goods for existing industries (Ref A). 
However, the FTZ site was bare when EconSpec visited on February 23. 
 The FTZ site manager, Mr. Wung and security officer Obileye, who 
moved to the site in June 2008, said nothing had been done at the 
site since it was  initially cleared. (Comment: Apart from three 
tractors and four trucks belonging to CCEC, there was nothing else 
to show for the project's progress.  Even the nearby Nigeria 
National Petroleum Corporation's gas pipeline is old and without 
gas. End comment).  EconSpec asked who was responsible for the road 
leading to the site, which was pocked with huge holes. Wung said 
CCEC had planned to reconstruct the road, but has been held up by 
the state government which has not provided the company with funds. 
 
 
Ogun Guangdong FTZ Also Stalled 
------------------------------- 
 
¶3. (U) EconSpec's visit to the Ogun Guangdong FTZ at Igbessa, also 
on February 23, revealed that the project is also stalled. Jennifer 
Chen Yu, an official of Guangdong Xinguang International Company, 
said her firm has the responsibility to build the FTZ and the roads 
leading to it. However, she said the current global financial crisis 
has affected the company's work plan on the project.  The company's 
representative in Nigeria has had to return to China to resolve 
funding issues. Chen Yu opined that the Ogun state government's 
commitment to the project may also have waned because of the 
worldwide economic slowdown. 
 
Ogun Budgets USD172 Million for Economic Projects 
--------------------------------------------- ---- 
 
¶4. (U) The Ogun state government has allocated naira 25.86 billion 
(USD172 million) or 26 percent of its 2009 budget to its Economic 
Affairs office, which oversees key economic projects including the 
FTZs. Yosola Akinbi, Economic Adviser to Governor Gbenga Daniel, 
told EconSpec that the governor is determined to start most of these 
projects this year despite the financial crisis and economic 
downturn. She said the state, whose 2009 budget is naira 22 billion 
(USD 147 million) less than its 2008 budget, plans to raise naira 27 
billion (USD 180 million) from bond issuance in the capital market. 
 
 
¶5. (SBU) Comment: Governor Daniel's administration had been lauded 
for its ambitious economic projects, including the free trade zones, 
deep seaport and international airport, all of which have been 
government buzz-words since 2007. Although many were skeptical about 
the viability of the projects because of their deferred benefits, 
the government appeared doggedly to be pursuing them. However, 
Governor Daniel has recently seemed distracted by political 
 
LAGOS 00000101  002 OF 002 
 
 
wrangling concerning his likely successor since his tenure ends in 
2011, and the global financial crisis appears to be one of several 
influences that have put the brakes on these projects.  His 
determination to start the projects now, despite the near certainty 
he will not be able to complete them before his term ends, may mark 
them as additions to Nigeria's long list of white elephant projects. 
End comment. 
 
¶6. (U) This cable was cleared with Embassy Abuja. 
 
Blair