NIGERIA: POL/ECON UPDATES FOR FEBRUARY 1-14, 2008

UNCLAS SECTION 01 OF 05 ABUJA 000313 SIPDIS SIPDIS SENSITIVE DEPT FOR AF/W, INR/AA ENERGY FOR CGAY AND GPERSON E.O. 12958: N/A TAGS: PGOV EPET PHUM EFIN ETRD KCOR KDEM ELAB MOPS NI SUBJECT: NIGERIA: POL/ECON UPDATES FOR FEBRUARY 1-14, 2008 REF: 07 LAGOS 749 THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION. ¶1. (U) Following is a joint Embassy Abuja-ConGen Lagos compilation of February 1-14, 2008 political/economic highlights, which did not feature in our other reporting, covering: -- Elections: Tribunals, Reforms, Party Politics -- Corruption -- Niger Delta -- Military Affairs -- National Assembly -- Human Rights, Labor, TIP -- Economic News -- Oil and Gas -------------- ELECTIONS: TRIBUNALS, REFORMS, PARTY POLITICS -------------- ¶2. (U) The Benue State Election Tribunal heard closing arguments February 10 in the petition against Senate President David Mark (PDP) by Usman Abubakar (All Nigeria People,s Party, ANPP). The court will announce the verdict date via hearing notice posted outside chambers. Lawyers expect a final judgment in the case by the end of February, at the earliest. Also in the same court session, the Tribunal struck out Mark,s application alleging Abubakar had "tampered" with evidence already remitted to court. ¶3. (SBU) In the lead up to the March 8 PDP national convention, the PDP will hold several congresses to elect party officials at the ward (February 21),local government (February 25),state (February 28),and zonal (March 4) levels. On February 6, the PDP caucus in the House of Representatives, led by National Assembly member Farouk Lawan, alleged PDP Chair Ahmadu Ali and the National Executive Committee of the party were employing "undemocratic" means and making decisions, including the lists of congress and convention committee members, without consultation with other party members. (Comment: A PDP activist told PolOff February 14 that he expects the PDP convention date to again be postponed due to ongoing controversy over the set-up of the convention committee, which allegedly has not followed the party's internal rules. The convention committee is important because it will set the playing field - level or not - for election of the new party chairman and other top officeholders. End Comment.) ¶4. (U) Several outstanding ambassadorial postings are set to be announced, according to press reports February 4. Retired Brigadier-General Oluwole Rotimi, former military governor of Western Province (all of what is now called the Southwest Zone) under Gowon, is expected to be announced as Ambassador to the U.S.; PDP Chair Ahmadu Ali, originally slated for the U.K., is expected to be confirmed as High Commissioner to South Africa. Also, physician Dalhatu Tafida may be announced High Commissioner to the U.K.; former Foreign Minister Joy Ogwu, who has advised the United Nations on disarmament issues and advocated closer Africa-Latin America relations, may be Ambassador to the UN; and former deputy governor of Katsina state, under President Yar,Adua, Garba Aminichi, may be announced Ambassador to Saudi Arabia. ¶5. (U) Nigerian press report February 1 former president Obasanjo "packed important documents relating to his tenure" and carted them away when he vacated office in 2007. Documents, including the Independent National Electoral Commission (INEC) registration certificate issued to the PDP are alleged to have gone missing. ¶6. (SBU) A traditional local ruler told PolOffs a by-election in Oyo State to replace assassinated House Representative Olusegun Oladimeji showed the continued electoral problems faced by the country. Voter intimidation and violence kept many people away from the polls. ABUJA 00000313 002 OF 005 ¶7. (SBU) On January 29, the Supreme Court dismissed a suit filed by former Governor of Anambra State Andy Uba, asking the court to reverse its judgment that upheld a lower courts annulment of his election. The Court described the appeal as a "waste of time" and a "mockery of the judiciary." A journalist in Anambra's capital Awka, told PolSpec the Supreme Court judgment was warmly received by the public, and said several groups had visited Governor Peter Obi to congratulate him on the ruling. Neither Uba nor any opposition group has criticized the ruling and there were no violent protests. -------------- CORRUPTION -------------- ¶8. (U) Former Delta governor James Ibori (PDP, 1999-2007), currently under investigation from the EFCC for allegedly stealing more than $80 million in public funds, was granted bail by a Kaduna High Court February 11. Ibori posted bail at $40,000, and was ordered to remain in Kaduna and surrender his tourist and diplomatic passports. His trial is scheduled to begin February 18. ¶9. (U) On February 11, an Enugu High Court granted bail to former Edo governor Lucky Igbinedion (PDP, 1999-2007),who is accused of 147 counts of corruption and money laundering, including allegations that he misappropriated $200 million from state coffers while in office. The court placed several conditions on Igbinedion,s bail, including ordering him to deposit his passport with the EFCC, restricting any international travel for himself and his two sureties (who must currently be federal permanent secretaries),and mandatory biweekly reporting to the EFCC. As of February 14, Igbinedion remained in EFCC custody in Enugu because he could not produce the requisite two sureties. Igbinedion,s trial is set to commence February 25. -------------- NIGER DELTA -------------- ¶10. (SBU) On February 1 a naval patrol team intercepted militants around the Cawthorne Channel, Rivers State. The militants were reportedly repulsed following a brief gunfight, according to security sources. No navy casualties were reported. The naval team captured one boat with an engine and three AK47s; the boat and rifles are now in government custody. ¶11. (SBU) Men dressed in military uniforms in three boats attacked a mobile police team attached to Shell operations at Cawthorne Channel, Rivers State on February 4, said security sources. The mobile police were apparently coming from Port Harcourt for a crew change when they were attacked; one policeman was reported dead, two injured. ¶12. (U) Rivers State Governor Rotimi Amaechi (PDP) presented the Fiscal Responsibility Bill to the Rivers State Assembly. The proposed law would clamp down on nepotism and favoritism in the awarding of contracts by stripping the Governor's office of its discretionary powers to award contracts. The Governor also proposed a bill that would compel the state to save 1 billion naira ($8.5 million) monthly to protect state finances from fluctuating oil prices. -------------- NATIONAL ASSEMBLY -------------- ¶13. (U) On February 12, the National Assembly passed the 2008 Appropriation Bill; however the Senate and House of Representatives each presented different figures. The Senate passed a budget in the amount of $24 billion (2.898 trillion naira),while the House passed a $25 billion (2.945 trillion naira) budget; both of which were higher than the $20 billion (2.4 trillion naira) proposed by President Yar'Adua. In anticipation of these differences, the two chambers constituted a Conference Committee comprised of key members ABUJA 00000313 003 OF 005 from both the House and Senate to harmonize the disparity before the bill is presented to the President. Newspaper reports February 14 indicated that President Yar'Adua was considering a veto of the Appropriation Bill out of concern that the Assembly is on a "spending spree" which could cause inflation. ¶14. (U) The National Assembly's Joint Committee on Appropriation, Finance, Aid, Loans and Debt Management on February 13 approved President Yar'Adua's debt write-off proposal for Liberia. The debt relief is part of a broader initiative by the international community to clear Liberian debt. The bill now passes to the full House of Representatives for approval. -------------- MILITARY AFFAIRS -------------- ¶15. (SBU) The fallout of the theft of arms from the Kaduna armory has begun. As a court martial sits this week to try the officers allegedly involved in the sales of hundreds and possibly thousands of small arms to Niger Delta militants, the Army Council has demanded the resignation of an unidentified Major General for his shoddy initial investigation of the affair. ¶16. (U) The GON announced the review and likely cancellation of hundreds of millions of dollars worth of defense projects, some of which have been in the pipeline for years. Reportedly included in the review are a $250 million purchase of F-7 fighter jets from China and the renovation of the Naval Ordnance Depot. -------------- HUMAN RIGHTS, LABOR, TIP -------------- ¶17. (U) On February 14, the Judiciary Staff Union of Nigeria (JUSUN) called off its 10-day nation-wide strike following a meeting between Labor Minister Hassan Lawal and former Nigerian Labor Congress president Adams Oshiomhole. Negotiations between the government and JUSUN will commence February 19. On February 11, Supreme Court staff had joined their colleagues in protest, resulting in a February 12 statement by the GON threatening to fire any staff that joined the strike. (Note: The JUSUN had been protesting the non-implementation of a recommended pay raise and demanding a uniform salary structure for all judicial staff nation-wide. According to JUSUN President, a 2006 Presidential Commission on the Reform of Justice Sectors recommended a pay raise for judicial workers, members of the Nigerian Police Force, and the Nigeria Prison Service; but judicial workers are the only ones who have not received the increase to date. On the contrary, Supreme Court Chief Registrar Usman Musale declared the workers demands unrealistic and stated that only an amendment to the 1999 Constitution would enable the implementation of a uniform salary structure. The National Judicial Council is only responsible for paying salaries of judges and Chief Registrars, while all support staff salaries are to be paid the individual State Judicial Service Commissions, ultimately making the state Governors responsible for the dispersal of funds and salaries. End Note.) ¶18. (U) On February 9, police intercepted a suspected human trafficker in the Birni Gwari area of Kaduna State with 24 female children aged 10-13 years allegedly being trafficked from Tsaragi in Kwara State to Kano. According to Kaduna State Commissioner of Police, Haz Iwendi, the suspect confessed to transporting the children, but said he had permission from the parents to take the children for domestic service. The suspect also said that he previously took his eight sisters to Kano to work as maids and that they made good money, prompting the others to want to go as well. ¶19. (U) On February 7, 105 teenagers were rescued from human traffickers. Police spokesperson of the Federal Capital Territory (FCT) command, Superintendent Ahmed Musa, said the ABUJA 00000313 004 OF 005 children were trafficked from Nassarawa, Lagos, Kano, Kwara, and some villages within the FCT to be used for sexual exploitation and forced labor. According to Musa, 22 suspects arrested are currently at Suleja prison awaiting their arraignment before an Abuja High Court. -------------- ECONOMIC NEWS -------------- ¶20. (U) The Governor of the Central Bank of Nigeria (CBN), Chukwuma Soludo, is considering having United Bank of Africa (UBA),subsidiary of UBA Capital (Europe),manage Nigeria's large and rising foreign exchange reserves, more than $54 billion. If this happens it would mean a major shift in policy by the CBN, which had in the past insisted that local banks interested in participating in the management of the country's lucrative foreign liquid assets join forces with reputable international financial institutions to be able to do so. This policy shift is still in the early stage and decision would require approval of the CBN board. ¶21. (U) Lagos State inaugurated a new litigation system designed to fast track resolution of commercial disputes. The system is designed to resolve disputes in eight months from the date the case is filed. A suit will qualify for the fast track system if the claim is for 100 million naira ($850,000) or more, if one or more of the parties is a non-resident investor, if the suit involves a mortgage, or if the claimant request the fast track process. ¶22. (SBU) PolOff met with Oge Egede, an official with the Kick Against Indiscipline (KAI) brigade. KAI is an environmental enforcement agency established in 2003 by Lagos state government. Members of the brigade, who wear distinctive green uniforms, are charged with enforcing environmental laws, eliminating illegal street trading, regulating private waste disposal companies and stopping indiscriminate littering. He described the work as sorely needed to counteract the degradation of public space in Lagos. According to Egede, violators are taken to mobile courts located at the police stations for summary payment. He regretted that the public misunderstands the work his brigade undertakes, and blames this on poor media outreach. Several weeks before this meeting, a post officer watched as a dozen KAI "officers" armed with batons descended from their bright green truck and attacked a plant seller's stand, tearing down signs and knocking over merchandise before leaving. Although his was one of many roadside stalls in the vicinity, the plant vendor was the only target of the KAI team. He remains in business in the same location. ¶23. (U) Magnus Kpakol, National Coordinator for the GON's National Poverty Eradication Programme (NAPEP),said the involvement of traditional rulers in Ogun State has helped link cassava processors to target markets, significantly lowering the poverty rate in rural areas of the state. NAPEP is promoting its new Village Economic Development Solutions Scheme (VEDSS) to develop rural economies. According to Kpakol, VEDSS proposes that every village have at least one anchor economic activity, likely agro-based. Villages are expected to have a trust fund that can be used for communal and infrastructure development. -------------- OIL AND GAS -------------- ¶24. (U) The Warri refinery returned to operation in early February. Warri has a nameplate capacity of 125,000 barrels per day, but is expected to initially run at 60 percent capacity. The return of Warri is welcome news for Nigeria, but the country will remain dependent on imported refined products. The Kaduna refinery will remain off-line for maintenance until August 2008. ¶25. (U) Flights across the country were canceled on February 7 due to a nationwide shortage of jet fuel. Nigeria imports all its jet fuel, but the immediate cause of the shortage was unclear. Some reports indicate that fuel distributed by ABUJA 00000313 005 OF 005 African Petroleum was out of specification and could not be used by airlines. ¶26. (U) According to government figures the GON spent $3.8 billion in fuel subsidies in 2007. According to a local business daily, the GON is already discussing with labor unions a gasoline price increase in June 2008. Publicly at least, the Nigerian Labor Congress has come out against any such move. Labor-union led strikes in June 2007 forced the GON to reduce a planned price hike. ¶27. (SBU) President Yar'Adua announced a new natural gas pricing policy that favors gas for electricity production and heavy domestic industries over gas destined for export. International oil companies complain that the new policy is based on wildly optimistic domestic demand assumptions and unrealistically low gas production costs. They claim it will hinder the overall development of Nigeria's largely untapped gas reserves and sets theoretical domestic demand against actual export projects already in the works. There was no announced date for the policy's implementation although controlling legislation will likely be required. ¶28. (SBU) Shell Petroleum Development Corporation's (SPDC's) proposed restructuring continues to generate controversy (reftel). The company's managing director testified about proposed layoffs at a public hearing of the House Committee on Upstream Petroleum on February 11th. Committee representatives accused Shell of favoring expatriates over Nigerians. On February 12th, Nigerian National Petroleum Corporation (NNPC) ordered Shell to halt the restructuring. SPDC is a joint venture company with the GON holding 55 percent of the company through a subsidiary of NNPC. Shell has announced that, as part of its "One Shell" concept, it would layoff between three and six thousand employees and combine parts of SPDC and Shell Nigeria Exploration and Production Company (SNEPCO),its offshore arm. Company contacts report Shell has already eliminated one layer of senior management, with Shell's Vice President Ann Pickard taking a more active role in operations. ¶29. (SBU) Press accounts say that President Yar'Adua discussed the restructuring with Royal Dutch Shell's CEO during the World Economic Forum in Davos. The GON is likely concerned not only with employment, but also with the impact combining SPDC and SNEPCO will have on Nigeria's joint venture operations. Shell may use the restructuring as a bargaining tool to win concessions from the GON on joint venture arrears, disputed oil blocks, and gas flaring deadlines. SPDC is widely regarded as bloated and inefficient by local industry executives and one company contact reports that SPDC is losing money for Shell. A local Chevron Vice President told Ambassador February 18 that Shell is working on managing its restructuring and problems with the GON by seeking a loan in the amount of $1 billion that will be used to offset some of the problems caused by the proposed restructuring. SANDERS