NIGERIA: BIWEEKLY POL/ECON UPDATES FOR SEPT 16-30, 2008

UNCLAS SECTION 01 OF 03 ABUJA 002008 SENSITIVE SIPDIS DEPT FOR AF/W, INR/AA STATE PASS TO USTR-AGAMA DOE FOR GEPERSON E.O. 12958: N/A TAGS: PGOV PHUM ECON EPET ETRD ELAB NI SUBJECT: NIGERIA: BIWEEKLY POL/ECON UPDATES FOR SEPT 16-30, 2008 REF: A. Abuja 1925 THIS CABLE IS SENSTIVIE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION. ¶1. (U) Following is a joint Embassy Abuja-ConGen Lagos Compilation of September 16-30, 2008 political/economic highlights, which did not feature in our other reporting, covering: -- National Assembly -- Corruption -- Military Affairs -- Labor -- Economic News -- Oil and Gas -- Criminal Justice National Assembly -------------- ¶2. (SBU) MEMBERS OF THE HOUSE SEEK TO INTRODUCE LEGISLATIVE DIMENSION TO YAR'ADUA'S 7-POINT AGENDA: Nine Representatives have formed a group to promote the enactment of legislation for each of the objectives in the President's 7-Point Agenda. "The 7-PAG", or "The 7-Point Agenda Group", came together in July 2008 before the National Assembly's recess. On September 18, Poloff met with the group's Coordinator, Representative Samson Osagie (People's Democratic Party (PDP),Edo State) in response to a letter of introduction sent to the Embassy. Osagie said the group sees a "disconnect" between the executive and legislative branches of government in Nigeria. Therefore, 7-PAG aims to get the House to support each point of the President's Seven-Point Agenda with legislation. Osagie specifically highlighted education, infrastructure, and agriculture as target areas for improvements. ¶3. (U) NATIONAL ASSEMBLY JOINT COMMITTEE ON THE REVIEW OF THE 1999 CONSTITUTION (JCRC) EXPANDS MEMBERSHIP TO 88: On September 25 the Guardian Newspaper quoted JCRC Chairman, Ike Ekweremadu as saying that the committee has 44 members from the House and 44 from the Senate (with one member of the House and one Senator from each state, one member of the House and one Senator from the Federal Capital Territory, and one additional representative from each zone to ensure women's interests were covered). Ekweremadu added that the committee would be inaugurated when the National Assembly resumes on October 7. (NOTE: On October 8, the joint committee encountered another setback when the House refused to inaugurate its portion of the committee, without public explanation. The federal budget money put aside for the exercise will expire if not spent by the end of the calendar year. END NOTE.) Corruption -------------- �A;¶4. (U) NIGERIA IMPROVES ITS RATING TO 121 OUT OF 180 MOST CORRUPT NATIONS: Transparency International (TI),a global civil society organization, rated Nigeria 121st in a September survey of 180 most corrupt nations. In 2007, Nigeria ranked 147 and three years earlier 152. TI noted that Nigeria was among several countries with significant improvement in the battle against corruption. In terms of the actual corruption perception index (CPI),Nigeria moved from a score of 2.2 in 2007 to a score of 2.7 in 2008. CPI measures the perceived levels of public sector corruption on a scale from zero (highly corrupt) to ten (highly clean),and carries a plus or minus .3 margin of error. ¶5. (U) IBORI'S LAWYER ARRESTED: Former Governor of Delta State James Ibori's lawyer, Bhadresh Gohil, was arrested in London and charged with money laundering. Gohil, who works at the London law firm Arlingtons Sharmas was arrested for helping the former governor launder money, and breaking the UK Proceeds of Crime Act, between 2005 and 2008. Ibori was arrested last year by the Economic and Financial Crimes Commission (EFCC) and arraigned before a Federal High Court in Kaduna for alleged financial crimes running into tens of billions of naira. ¶6. (U) EFCC FREEZES RIVERS STATE ACCOUNT: The Economic and Financial Crimes Commission (EFCC),has frozen one of the accounts of the Rivers State government over alleged money laundering. According to ABUJA 00002008 002 OF 003 EFCC sources, up to $4 million was diverted from government accounts to a fictitious account, allegedly by Nyeson Wike, Chief of Staff to the governor of Rivers State. Military Affairs -------------- ¶7. (U) MILITARY TO RECEIVE INCREASED BUDGET: After a September 16 meeting with the new Service Chiefs, the Office of the President announced an increased military budget over the next two years "to transform the armed forces (to become a) technology driven, well-equipped force (made up of) highly motivated and contented officers and men." While press reports did not give specifics, the President is reported to have told the Service Chiefs that he is aware of the challenges the military faces and the inadequacy of current funding levels and that he hopes to begin to "see tremendous improvement in the funding situation because of this change." Labor -------------- ¶8. (U) NIGERIAN LABOR MINISTRY INTERVENES IN DISPUTE BETWEEN NUPENG AND CHEVRON: The Nigerian Labor Ministry has intervened in the dispute between a local branch of the National Union of Petroleum and Natural Gas Workers Union (NUPENG) and Chevron Nigeria Ltd. (CNL) in an effort to avert a strike. NUPENG opposes the casualization of the workforce, under which CNL employs its members as contractors without pensions and other benefits. General Secretary for NUPENG, Bernard Ugbi, warned that a strike will affect production of approximately 700,000 barrels of oil a day. There is no firm date yet to hold talks with the ministry and Chevron over the labor issues. A Chevron spokesman in Nigeria declined to comment on the dispute. Economic News -------------- ¶9. (U) IMPORTS OF U.S. TALLOW INCREASE: Imports have soared in 2008 and are expected to reach nearly $80 million, up from $16 million in ¶2007. Nigeria is currently the third largest market in the world for U.S. tallow. The rapid growth has been caused by two major factors: Overall growth in soap manufacturing in Nigeria and reduced competition from domestically produced palm oil. While tallow imports have been at record levels this year, industry sources indicate that these imports could slow next year. In August 2008, the GON lifted the prohibition on the importation of soap noodles and flakes and instituted a 20 percent duty on these products. Industry sources expect strong competition in the next year from soap noodles and flake supplies from major palm oil producers in Malaysia and Indonesia. The price of imported soap noodles is often cheaper than domestically produced soap largely due to very high Nigerian manufacturing costs resulting from routine power shortages. ¶10. (U) THE GON REDUCED IMPORT PROHIBITION LIST: The GON reduced the number of goods on the import prohibition list from 43 to 26, but instituted tariffs on the imported items up to 35%. On September 24, the Controller-General of the Nigerian Customs Services Hamman Ahmed announced that all transactions and payments for customs services would be done though e-payment starting October 1. See reftel A. ¶11. (SBU) EKITI STATE ECONOMIC SUMMIT: Participants at the poorly-attended Ekiti State Economic Summit, held June 25-27 at the Ekiti Trade Fair Complex, complained about the lack of development planning and planning capacity, inconsistency in government policy, and the futility of public-private partnerships when no public capacity exists. Governor Oni's (PDP) presentation focused on investment opportunities within the state, listing accomplishments of his administration to lukewarm applause. Oni prioritized the dairy, brick, ethanol, biodiesel, farm fencing/gate, and cattle industries as state priorities. Frustrations were evident among the presenters; one was particularly critical, linking good economic development indicators to good governance. He spoke directly to an unimpressed Governor Oni, saying that government's job is to make good use of fiscal tools at its disposal and to invest in its institutions, human capital, infrastructure and direct production in order to create sustainable development. PolOff visited the Ikogosi ABUJA 00002008 003 OF 003 Warm Spring Resort, touted by Oni as the savior of the Ekiti tourism industry. The small, outdated facility consisted of spring water piped into a swimming pool near a run-down hotel. ¶12. (SBU) ONDO STATE - FUEL DEPOT SHORT OF SUPPLY: During a September 17 visit to the Ore, Ondo State Nigerian National Petroleum Company (NNPC) depot, an assistant to the depot manager told Poloff and PolSpec that the depot supplies petroleum products to Ondo, Ekiti, Osun, Edo and Kogi states, and receives its supplies from Mosimi, a major depot in Ogun State. During the visit only two distribution trucks were observed being filled and four were waiting in line. The manager said there was not enough fuel to fill all the other trucks in the parking lot. If operating at full capacity, the depot can provide 300,000 liters a day. However, theft along the pipeline has reduced output. The depot was shut down following extensive vandalization of the 151 kilometer pipeline; it reopened in June 2006. Recently, the Niger Delta militant group MEND reportedly issued a warning that it would blow up the pipeline if the federal appeals court reinstates former Ondo State Governor Agagu (PDP) to his post. Charges of fraud led an elections tribunal to overturn his 2007 election. Oil and Gas -------------- ¶13. (U) $62.5 OIL BENCHMARK FOR 2009 BUDGET: On September 24, the Ministry of Finance announced a proposed $62.5 per barrel of oil as the benchmark for the 2009 budget. MinFin projected oil output at 2.3 million barrels per day (bpd). The 2008 budget was based on a projected production of 2.45 million bpd and a benchmark of $59 per barrel. Nigeria started a process of crude oil benchmarking for its budget in 2004 to compensate for the constant fluctuations of prices in the oil market. ¶14. (SBU) PIPELINE RUPTURE IN DELTA STATE: A portion of the Chanomi Creek oil pipeline in the Warri Southwest Local Government Area in Delta State ruptured on October 1. The pipeline supplies crude oil to the Warri refinery. It is not clear if the rupture was accidental or the result of sabotage. The pipeline was the target of repeated attacks in recent years. Government relations managers for the Nigerian National Petroleum Corporation and Chevron said the pipeline break did not disrupt supplies to the Warri refinery. NNPC has reportedly awarded a $5.4 million repair contract to Fenog Nigeria LTD, a Warri-based, Nigerian-owned company. Criminal Justice -------------- ¶15. (U) LAGOS STATE - CRIMINAL JUSTICE REFORM: A June 3 workshop on the Administration of Criminal Justice Law in Lagos State acquainted stakeholders with changes to the Lagos State Criminal Administration Law, passed in 2007 and now slowly being implemented around the state. The law targeted specific weaknesses in administration including delayed investigations, lack of information sharing among agencies, absences of witnesses and investigators during court proceedings, prison congestion, and frivolous defense objections during court cases. Included in the law is the country's first plea bargain provision, intended to reduce prosecutorial work load and court costs. ¶16. (SBU) LAGOS STATE - CRIMINAL CASE TRACKING SYSTEM: A July 10 meeting with project managers for the British Council-sponsored Lagos State case tracking system showed Lagos State's commitment to modernizing its Ministry of Justice. Each of Lagos' five prisons, the Ministry of Justice, the Police units and Court systems all share information via this computerized system to better track arrestees and their cases. Each agency has dedicated computers, but because the computers are not yet connected, information is shared via compact disk. However, project managers stated they are facing increasing resistance from senior officials as the project goes forward. Governor Fashola strongly supports the project, the managers said, both institutionally and financially, with the result that state institutions are less resistant than federal ones to the project.