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UNCLAS SECTION 01 OF 03 ABUJA 001289 
 
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E.O. 12958: N/A 
TAGS: PGOV ECON ELAB PREL EPET EFIN NI
SUBJECT: NIGERIA:  BI-WEEKLY POL/ECON UPDATES FOR JUNE 15-30, 2009 
 
¶1. (U) The following is a joint Embassy Abuja, ConGen Lagos 
compilation of June 15-30, 2009 political/economic highlights, which 
was delayed in transmission and did not feature in our other 
reporting, covering: 
 
--Political News 
--Economic News 
--Oil and Gas 
--Delta Incidents 
 
POLITICAL NEWS 
-------------- 
 
¶2. (U) SENATE SECOND READING OF EXEC BILL: Nigeria Television 
Authority (NTA) reported on June 30 that the Senate has passed the 
second reading of an Executive Bill seeking to alter provisions of 
Nigeria's 1999 Constitution on elections.  The report said the 
Senators want to broaden the scope of the Executive Bill to cover 
fundamental electoral reforms and provisions on governance including 
allowing independent candidates to run for offices as well as 
creating financial autonomy for the National Assembly and the 
Judiciary. 
 
¶3. (U) HOUSE REP RESIGNS: Raypower Radio in Abuja reported on June 
24 that the Chair of the House of Representatives Committee on 
Information, Dino Melaye, has resigned after his failure to convince 
other members of the allegation of misappropriation of 150 million 
naira by the House Chief Whip.  The House Speaker accepted Melaye's 
resignation and said that the House Committee on Ethics and 
Privileges will still investigate the allegation. 
 
¶4. (U) LABOR GROUP SUPPORT AMNESTY: On June 28 the Nigeria Labour 
Congress (NLC) issued a press communique supporting Amnesty to all 
the fighters in the Niger Delta.  They stated that "the NLC has for 
a long time canvassed for such a move as the immediate and direct 
casualties of the armed conflict include workers in the oil industry 
who are victims of kidnapping, or who in some cases have lost their 
lives.  Apart from our members who work under such unsafe 
conditions, foreign workers whom the NLC is under international 
workers solidarity, obliged to protect, have also been casualties in 
the Niger Delta agitation."  The NLC also expressed "an urgent need" 
to curtail and control the activities of oil companies who "cream 
off the oil profits, pollute the air, water, and land in the Niger 
Delta, and have no sense of social responsibility to the communities 
from which they extract black gold." 
 
¶5. (U) UNVERSITY PROFS STRIKE OVER BUDGET: ThisDay reported on June 
23 that the Academic Staff Union of Universities (ASUU) ordered its 
members in both federal and state universities nationwide to 
immediately proceed on an indefinite strike over the GON's 
unresponsiveness to its two and a half year old demands on four main 
issues: adequate budgetary provision for education, improved service 
to prevent brain drain, university autonomy, and academic freedom. 
According to ASUU President Professor Ukachukwu Awuzie, "if Nigeria 
is to get to where it ought to be, a minimum of 26 per cent of the 
annual budget of both the state and Federal Governments should be 
allocated to education to halt the growing inability of the children 
of the underprivileged to get education."  However, the Zaria branch 
of the union at Ahmadu Bello University (ABU) collectively decided 
not to join the strike due to undisclosed disagreements with the 
national body.  The strike has halted second semester final 
examinations in universities across the country. 
 
ECONOMIC NEWS 
------------- 
 
¶6. (U) NIGERIA AND RUSSIA SIGN SIX BILATERAL AGREEMENTS: On June 24 
the Government of Nigeria and the Russian Federation signed six 
agreements on nuclear energy, transfer of prisoners, investment 
promotion, legal cooperation, field of exploration of outer space, 
and joint venture between Nigeria National Petroleum Corporation 
(NNPC) and Gazprom (see below).  Russian President Dmitry Medvedev 
was on a one-day visit to Nigeria to meet with President Yar'Adua to 
 
ABUJA 00001289  002 OF 003 
 
 
discuss bilateral co-operation, challenges facing the African 
Continent and how to further strengthen economic ties between 
Nigeria and Russia. 
 
¶7. (U) NIGERIA LOST 37.5% FOREST RESERVE IN 15 YEARS: During the 
Ecological Fund meeting in Abuja on June 24, Minister of Environment 
John Odey disclosed that more than 37% of the country's forest 
reserves were lost between 1990 and 2005 as a result of illegal and 
uncontrolled logging, incessant bush burning, fuel wood gathering 
and clearing of forests for other land uses.  Odey emphasized that 
the uncontrolled forest management has led to declined soil 
productivity, loss of aquatic life and water, and air pollution. 
 
¶8. (U) WORLD BANK TO UPGRADE NIGERIA'S AIRPORTS: The World Bank has 
designated $10 million to upgrade safety equipment at major Nigeria 
airports.  According to the press reports, the fund will be used to 
address infrastructure decay and navigational aids at the airports. 
The upgrade of the airports will be carried out directly under the 
supervision of officials from the World Bank.  The Lagos Murtala 
Muhammed Airport Ikeja, Abuja's Nnamdi Azikiwe International Airport 
Abuja, the Mallam Aminu Kano International Airport (MAKIA), Kano and 
the Port Harcourt International Airport are beneficiaries of this 
project. 
 
¶9. (U) NORTHERN MONARCHS PLEDGE SUPPORT FOR POLIO ERADICATION: 
During a June 16 meeting, leading Northern traditional rulers 
expressed their commitment to eradicate polio in Northern Nigeria. 
The Sultan of Sokoto, Alhaji Sa'ad Muhammad Abubakar III, urged the 
traditional rulers to become personally involved in polio 
eradication initiatives.  He inaugurated the National Task Team of 
traditional rulers that would develop a framework for implementing 
outcomes of the meetings and assisting in monitoring progress 
towards polio eradication.  Traditional rulers present on June 16 
meeting included Emir of Zazzau, Emir of Kano, Shehu of Borno, Etsu 
Nupe, Emir of Damaturu and Emir of Gwandu. 
 
¶10. (U) NIGERIA'S DEBT RISES TO $3.6 BILLION; INFLATION AT 10%: On 
June 29, Director General of Debt Management Abraham Nwankwo 
disclosed that Nigeria's current debt stood at $3.6 billion as of 
May 2009.  He stressed that external debt accounts for 16% and 
domestic 84% of the total public debt portfolio.  Nwankwo voiced a 
challenge to sustain a healthy debt plan, as Federal and State 
governments require larger funding than their budgetary revenues to 
finance infrastructure and economic activities.  New CBN Governor 
told Ambassador that current inflation rate is 10%, but he his 
hoping to bring that down to single digits by December 2009. 
 
OIL AND GAS 
------------- 
 
¶11. (SBU) NNPC, GAZPROM SIGN NATURAL GAS MOU: On June 24, during the 
visit of Russian President Medvedev to Nigeria, Russia's Gazprom and 
NNPC signed a memorandum of understanding to create a joint venture 
company that will produce and market Nigerian natural gas for use 
domestically.  Gazprom executive Boris Ivanov said ownership of the 
joint venture company would be spit 50/50 between NNPC and Gazprom, 
but gave few additional details.  Press reports indicate that the 
company, to be called "Nigaz", has yet to be officially formed and 
does not yet have a legal structure, employees, or funding. 
(Comment:  There is a world of difference between an MOU to 
establish a company sometime in the future and an actual company 
that does something.  MOUs in the Nigerian oil and gas sector can be 
as ephemeral as the vague press releases that herald their signing. 
A 50/50 ownership structure sounds implausible; NNPC typically takes 
a majority stake in such ventures.  End Comment.) 
 
¶12. (SBU) OIL COMPANIES RELEASING EXPAT STAFF: An executive with a 
US oilfield services company in Nigeria told Energyoff on June 27 
that international oil companies are sending expatriate staff out of 
Nigeria in record numbers because of the poor business climate.  He 
said international oil exploration and production companies are 
scaling back or canceling major contracts and the rig count is 
falling rapidly.  His company halted plans to bring additional heavy 
 
ABUJA 00001289  003 OF 003 
 
 
equipment to Nigeria from the US after a major client cancelled a 
contract and no other local prospects for the equipment could be 
found.  Uncertainty surrounding Nigerian oil and gas policy and not 
security was the main reason, he claimed, that oil companies are 
scaling back in Nigeria.  (Note:  Just six months ago this contact 
said his company was looking to expand its operations in Nigeria and 
company equipment was completely booked through the end of 2009, 
despite lower oil prices.  End Note.) 
 
¶13. (SBU) Industry executive speculate that the directors of the 
nine NNPC subsidiary companies, which control NNPC's overseas oil 
trading operations, importation of refined products, natural gas 
transmission, and oil refineries among other businesses, may be 
replaced en masse this summer.  One industry contact, a Nigerian 
with decades of executive experience with a European oil company, 
said on June 24 that the change in management is part of plan by 
Energy Minister Lukman and NNPC chief Mohammed Barkindo to begin 
reform the state oil company prior to National Assembly approval of 
reform legislation.  The contact said Lukman and Barkindo are 
frustrated with the legislature's failure to act quickly on the 
petroleum industry reform bill.  The contact thought the bill was 
"dead" until after the 2011 election because it challenged too many 
vested interests in the National Assembly.  (Comment:  Even if the 
rumors of impending personal changes are true, reform may not the 
only reason Lukman and Barkindo are seeking change.  Most of the 
subsidiaries are lucrative sources of cash and are considered by 
some observers to be key patronage positions in NNPC.  It could be a 
reform move or it could be a move to put trusted insiders in place 
before the 2011 Presidential election campaign starts in earnest. 
End Comment.) 
 
¶14. (SBU) Ambassador spoke to several U.S. oil company officials 
about recent hits on oil facilities in the Niger Delta region.  One 
trend that seems to be emerging is that information is going to 
attackers from either current or previously employed oil workers. 
(Note: We will report more septel.  End Note.) 
 
Delta Incidents; No hostages 
---------------------------- 
 
¶15. (U) Attacks against oil pipelines and flow stations were 
reported on June 17, 19, 21, 25, and 29 with three attacks within 24 
hours on June 21.  Shell facilities were attacked at Aghoro-2 in 
Bayelsa State (June 17), at Adamakiri and Kula and the Afremo (June 
21) and the Billie-Krakama pipeline in Rivers State (June 25).  In 
addition, armed militants engaged men of the Joint Task Force 
stationed at Obioku community in Bayelsa State and attacked the 
Omoku-Ogoda-Brass trunk line belonging to the Nigerian Agip Oil 
Company causing a oil spill on June 19.  A spokesman for the The 
Movement for the Emancipation of the Niger Delta (MEND) claimed 
responsibility for all the attacks.  There were no confirmed reports 
of casualties or hostages. 
 
¶16. (U) According to press reports, a multi-million naira Niger 
Delta Development Commission (NDDC) project in Oporoma community in 
Bayelsa state was also blown up allegedly by MEND on June 13.  The 
project manager of the dredging firm contracted to implement the 
project, Atlantic Nigeria Limited, Mr. Henry Okolia, said the attack 
was a serious setback for the NDDC's effort to help the Oporoma 
community. 
 
SANDERS