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Identifier
Created
Classification
Origin
03LAGOS2287
2003-11-04 17:41:00
CONFIDENTIAL
Consulate Lagos
Cable title:  

PRESIDENT SHUFFLES THE DECK WITH NEW OIL ADVISOR

Tags:   EPET  PGOV  PINR  PREL  EINV  NI 
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						C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 002287 

SIPDIS


E.O. 12958: DECL: 11/04/2013
TAGS: EPET PGOV PINR PREL EINV NI
SUBJECT: PRESIDENT SHUFFLES THE DECK WITH NEW OIL ADVISOR
AND NIGERIAN OIL CORP CHIEF

Classified By: J GREGOIRE FOR REASONS 1.5(B) AND (D)




1. (U) SUMMARY. On Monday, November 3, the GON announced the
removal of Jackson Gaius-Obaseki as the Group Managing
Director (GMD) of the Nigerian National Petroleum Corporation
(NNPC). Funsho Kupolokun, former Special Assistant to the
President on Petroleum Matters, was appointed new GMD,
effective immediately. The GON also announced Edmund Daukoru
would replace Dr. Rilwanu Lukman as the Special Advisor to
the President on Petroleum and Energy. Jafaru Paki will be
the new Special Assistant to the President on Petroleum
Matters. END SUMMARY.




--------------------------


OUT WITH THE OLD


--------------------------






2. (C) Jackson Gaius-Obaseki was unceremoniously replaced as
head of NNPC by means of a terse statement read by the
Secretary to the Government of the Federation. Obaseki had a

SIPDIS
tumultuous tenure as NNPC chief. His removal had been
speculated since August 2003, when almost the entire top
management of the NNPC was sacked. Obaseki had frequent
run-ins with both the National Assembly and the Revenue
Mobilization, Allocation and Fiscal Commission (RMAFC).
Obaseki was also never close to Presidential Adviser and
former OPEC Secretary General Rilwanu Lukman, but seemed to
ensure his political survival, until this week, by reporting
directly to the President.




3. (C) The President may have had enough of Obaseki over the
issue of fuel deregulation. The overall mood in Nigeria has
been tense for the last month as organized labor threatened
to engage on a nationwide strike to protest rising fuel costs
as a result of the sudden Presidential announcement on
October 1 that Nigeria's downstream sector would be
deregulated immediately. President Obasanjo wanted complete
deregulation of the downstream sector to take effect
immediately, whereas Obaseki supported staggered deregulation
to lessen its impact.




4. (U) Deregulation has been a flash point for union and
public ire also because of the sorry state of the nation's
four oil refineries. During Obaseki's watch (1999-2003),
repair and maintenance contracts worth hundreds of millions
of dollars were paid out, yet the refineries rarely achieved
a production level above 40 percent of capacity. Throughout
the last year, all four refineries were offline on several
occasions for weeks at a time. As a result, this oil
exporting country has had to import up to 100 percent of its
fuel consumption needs. While Obasanjo claims the
elimination of subsidized NNPC crude oil and fuel purchases
will save the country two billion dollars per year, union and
civil society advocates point to the ongoing maintenance and

repair work at the refineries (to no apparent end) as proof
of systemic corruption in NNPC, which, they argue, will not
be addressed by deregulation.


No Stranger to Controversy




5. (U) Obaseki frequently was called before the National
Assembly to face charges of misappropriation of oil revenues.
The RMAFC also investigated the NNPC concerning the operation
of special accounts for the proceeds of crude oil sales
(constitutional provisions require revenues to be paid into
the Federation Account, which is shared by the federal, state
and local governments).




6. (U) Obaseki recently came under fire for admitting in a
news daily that the NNPC had paid some 224 million naira
($1.7 million US) for hotel suites he used at the Abuja Nicon
Hilton over the last four years. He fueled the fire by
claiming that this was a sacrifice on his part; he said he
was forced to stay at the Hilton because the amount allocated
for his accommodations was inadequate to build a home
suitable for his position and stature. He also admitted in a
recent interview that over 1,000 petitions had been written
against him during his tenure as GMD of NNPC, and it is only
by divine intervention that he was able to keep his job.


Limited Options




7. (C) While there is much wrong at NNPC, and even if he had
had the best of intentions, Obaseki was limited in his
professional and political options given the fact that
President Obasanjo kept Lukman close as Special Advisor, and
Obaseki was not a member of the cabinet. Obaseki did manage
a reorganization of NNPC, and at least in the first three
years of Obasanjo's presidency, fuel queues, long the bane of
Nigerian commerce and consumers, had virtually disappeared.




--------------------------


IN WITH THE NEW


--------------------------




8. (C) The new NNPC head, Funsho Kupolokun, is a former group
executive director of NNPC, and an advocate of fuel
deregulation. He is known to lecture audiences on the
benefits of deregulation using a laptop PC and projector. He
has maintained a good relationship with Obasanjo during his
time as Special Assistant to the President on Petroleum
Matters, and is an alumnus of the President's high school,
Baptist Boys High in Abeokuta (the president is reputed to be
kind to the boys of his school). Kupolokun hails from Ondo
state in the South South region.


9. (C) Alhaji Jafaru Aliyu Paki assumes Kupolukun's role as
Special Assistant to the President on Petroleum Matters.
Paki has a long career in the petroleum industry, beginning
with Mobil Nigeria. He worked for NNPC at both the Warri and
Kaduna refineries, and at the Pipelines and Products
Marketing Company (PPMC), before being seconded to Unipetrol
in the 1980s where he served as Executive Director for
Marketing. He retired when Unipetrol was privatized. Paki
is from Kaduna, and is reportedly close to Vice President
Atiku. (NOTE: According to a Shell executive, Jafaru shares
the Vice President's aversion to transparency and his
inclination to dip into the till.)




10. (C) The GON also announced on November 3rd that Dr.
Edmund Daukoru has assumed the position as Special Advisor to
the President on Petroleum Matters, from which Lukman
resigned effective November 1. An Ijaw from Bayelsa state,
Daukoru was a manager with Shell Oil during the 1970s and
early '80s, and was NNPC managing director under President
Ibrahim Babingida. A Shell manager reports that Daukoru is a
director of Platform Oil, an indigenous company that recently
won a license in Nigeria's marginal fields offering. News
reports are calling Daukoru a reform-minded technocrat. He
too is considered a strong advocate for downstream
deregulation, but also said in a recent interview that better
communication of government policy is needed to win popular
support.




11. (C) COMMENT: Even with NNPC's chronic problems, Obaseki
was at least an approachable figure for both the Mission and
corporate leaders. We will report septel on the view from
within NNPC and the oil business community regarding these
personnel changes, and what message President Obasanjo may be
sending by this shuffling. END COMMENT.
HINSON-JONES