VZCZCXRO9950
RR RUEHMA RUEHPA
DE RUEHNM #0371/01 1411152
ZNR UUUUU ZZH
R 211152Z MAY 09
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 5052
INFO RUEHFR/AMEMBASSY PARIS 0842
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 03 NIAMEY 000371 
 
DEPT FOR EEB/ESC/IEC/ENR, AF/W 
 
PARIS PASS TO AFRICA WATCHER 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID ECON ENRG EMIN EPET PGOV PREL NG
SUBJECT: NIGER'S EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE: SLOW 
START AND LIMITED COMMITMENT 
 
REF:  STATE 28858 
 
¶1. SUMMARY:  Niger was admitted as an EITI candidate country in 
September 2007, but has yet to publish a public accounting of 
government revenues from mining and other extractive industries. 
Niger's EITI Coordinator expresses confidence that an initial 
reconciliation will be published in June based on the 2005-2006 
audited results for the three mining operations with majority 
foreign ownership, and that Niger will complete the EITI validation 
process by the deadline of March 2010.  Civil society groups active 
in the EITI process did not agree to limiting the scope of the 
report, and they argue that a comprehensive EITI process should 
address the politically charged issues of payments for exploration 
permits issued since 2007 and the petroleum production agreement 
signed with the Chinese in 2008.  End summary. 
 
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EITI NIGER COORDINATOR EXPRESSES CONFIDENCE 
------------------------------------------- 
 
¶2. On May 6, Econoff and LES Econ Assistant met with Abdoul Aziz 
Askia, Coordinator of Niger's Extractive Industries Transparency 
Initiative (EITI), as requested in reftel, to assess Niger's 
progress in meeting the EITI validation deadline of March 2010. 
Abdoul Aziz expressed confidence that Niger is on track to complete 
the validation process well before the deadline of March 9, 2010. 
An ambitious plan of action was presented to donors and other 
interested parties in December 2008, but delays in funding slowed 
implementation until French President Sarkozy made the EITI process 
the focus of his March 27 visit to Niamey.  Sarkozy, Niger Prime 
Minister Seini Oumarou, and EITI Board Chairman Peter Eigen all 
expressed commitment to Niger's EITI process during a highly 
publicized roundtable meeting at which Sarkozy announced that France 
would provide an additional 140,000 euros funding for EITI Niger. 
The French donation, combined with US$245,000 from the World Bank 
and US$45,000 from UNDP, will fund a more modest EITI program 
through June 2010.  The Government of Niger (GON) contributes 20 
million CFA (approximately US$40,000) annually to cover basic 
expenses of the Secretariat, which has been relocated from the Prime 
Minister's Office to an independent office. 
 
--------------------------------------------- -------- 
CIVIL SOCIETY GROUPS ARE COMMITTED BUT LESS CONFIDENT 
--------------------------------------------- -------- 
 
¶3. Despite Abdoul Aziz's confidence and enthusiasm, and the 
publicity boost of the March 27 roundtable, Niger has yet to issue 
its first report.  Abdoul Aziz stated that the first report is due 
in June and will be based on audited accounts of the three largest 
mining companies for the period 2005-2006.  This would not cover 
other extractive industrial units operating in Niger during that 
time period, such as the government-owned coal company SONICHAR, a 
gypsum mine, and artisanal gold mining.  According to Abdoul Aziz, 
these other operations were excluded because they did not provide 
government revenues above a threshold level.  He commented that the 
second report, covering 2007-2008, may expand coverage to additional 
companies and take into account the public response to this first 
effort.  Abdoul Aziz earlier used the audited results provided by 
these companies to do a "dry run" of a first report.  According to 
civil society participants in the multi-stakeholder group, there was 
no consensus on limiting the scope of formal reconciliation, but the 
consultant is working on that basis.  (Comment:  Abdoul Aziz appears 
to be advocating that the limitation is the only way to meet the 
time constraints of the validation schedule.  End comment.) 
 
 
 
-------------------------------------- 
MEMBERS OF THE MULTI-STAKEHOLDER GROUP 
-------------------------------------- 
 
¶4. Socit des Mines de l'Aor (SOMAIR) and Compagnie Minihre 
d'Akouta (COMINAK) produce uranium ore, and are majority owned and 
operated by French power parastatal AREVA.  Societe Miniere Liptako 
(SML), Niger's only commercial gold mine, is majority owned by two 
Canadian mining companies, one of which operates the mine.  The GON 
is a shareholder in all three companies, with 37% of SOMAIR, 31% of 
COMINAK, and 20% ownership in SML.  All three companies are 
represented in the EITI process. 
 
¶5. Civil society organizations active in the EITI process include 
the local chapter of Transparency International; Reseau des 
Organisations pour la Transparence et l'Analyse Budgetaire (ROTAB), 
a local non-governmental organization (NGO) affiliated with "Publish 
What You Pay," that represents a network of civil society 
organizations interested in budget transparency; Groupe de Reflexion 
sur les industries Extractives (GREN), a domestic NGO that has 
 
NIAMEY 00000371  002 OF 003 
 
 
published reviews of the gold sector; and the private press. 
 
¶6. EITI Niger benefits from high-level political involvement. 
Mohamed Abdoulahi, Minister of Mines and Energy, was chosen as 
President of the implementing committee, and the Ministry of the 
Economy and Finance is also very involved.  Other government 
ministries participate when EITI takes up an issue of particular 
interest to them. 
 
------------------------------------------- 
THE EITI PROCESS IN NIGER:  EMPTY MOMENTUM? 
------------------------------------------- 
 
¶7. Abdoul Aziz previously worked for the Office of the Prime 
Minister, and the organization was based initially within it.  It 
recently moved to separate offices located in an older home that is 
only partially converted for business use.  In addition to 
reconciliation reports, EITI Niger initiatives include capacity 
building, particularly for local NGOs, and development of a 
communications strategy to ensure that EITI activities, including 
the first report, reach the broadest possible national audience. 
The small staff and spare environment do not appear equipped to 
manage the ambitious work plan and complete validation by March 
2010, especially given the busy travel schedule of the coordinator, 
who was elected as one of two francophone representatives to the 
EITI international board. 
 
¶8. The process of generating an EITI reconciliation report is 
actually carried out by an independent consultant acting as the 
administrator.  According to Abdoul Aziz, EITI Niger plans to 
identify and hire the independent administrator immediately, so that 
the first report can be delivered in June. (Note:  This time frame 
would only be possible if the initial report is, as he proposes, 
limited to the results of the three companies that have already 
provided their audited results.  End note.) 
 
¶9. The process of validation also requires the involvement of an 
independent consultant, who must be selected from a list of 
individuals approved as "validators" by the EITI international 
secretariat.  The validation process is not an audit, but rather an 
evaluation of the implementation of the EITI process in consultation 
with all parties involved.  The validator verifies that the outcomes 
of the process conform to EITI global standards and identifies ways 
in which the EITI process can be strengthened in the future.  Abdoul 
Aziz claims that EITI Niger will be ready to initiate the validation 
process very soon, and that there would be no problems in meeting 
the March 2010 deadline. 
 
---------------------------------- 
CIVIL SOCIETY TAKES THE INITIATIVE 
---------------------------------- 
 
¶10. The civil society participants in Niger's EITI process appear to 
have accepted that the initial reconciliation report will be limited 
to three companies and the 2005-2006 time period.  To address the 
limited scope and reinforce the EITI process, and with the financial 
support of Revenue Watch Institute (RWI), ROTAB will sponsor a 
"Forum on Extractive Industries" in Niamey, July 13-15, 2009.  The 
Forum will look at three mining projects:  the Samira gold mine 
(which is included in the proposed EITI review), the Agadem oil 
project, and Imouraren, the huge new uranium project that AREVA is 
developing.  The companies will present information on their 
projects, and the Forum will include groups that are not included in 
the EITI stakeholder group, including parliamentarians, academics, 
and local authorities.  The general objective of the Forum is to 
provide more information about the projects, improve transparency 
regarding actual and anticipated revenues, and ensure that those 
revenues are used equitably for the enduring and sustainable 
development of Niger.  The Government of Niger is represented in the 
schedule, but has not yet confirmed participation in the event. 
 
------- 
COMMENT 
------- 
 
¶11. While it would be quick and easy, a reconciliation report based 
on the 2005-2006 audit reports of three companies will be little 
more than a pro forma exercise, and will not cover many of the 
controversial or disputed sources of government income from 
extractive industries in Niger.  That time period predates GON 
actions to open new areas for mineral exploration, which generated a 
huge wave of exploration contracts in 2007 and 2008.  Moreover, the 
current EITI Niger work plan limits review to the audited results of 
companies that are actively producing, effectively excluding 
payments for exploration contracts. 
 
¶12. The Government of Niger does not have a record of transparency, 
 
NIAMEY 00000371  003 OF 003 
 
 
and has yet to release detailed information on major new 
investments, including the Chinese petroleum production agreement. 
Just this week, GON allies in the National Assembly defeated a 
proposed inquiry into alleged irregularities in the process of 
granting mineral exploration contracts.  Unless the scope of inquiry 
is expanded to include payments for exploration contracts and the 
terms of new contracts, the EITI process in Niger will not address 
public concerns about corruption in the process of allocating the 
exploration permits and/or negotiating initial project terms.  Civil 
society organizations are attempting to address some of these 
deficits through a public Forum on Extractive Industries, but the 
Government of Niger has not yet demonstrated a willingness to 
support that effort.  End comment. 
 
ALLEN