Identifier
Created
Classification
Origin
08MONROVIA793
2008-10-10 11:09:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Monrovia
Cable title:  

SCENESETTER FOR LIBERIA FOREST INITIATIVE RETREAT

Tags:  EAGR PGOV EINV EAID SENV LI 
pdf how-to read a cable
VZCZCXRO3177
RR RUEHMA RUEHPA
DE RUEHMV #0793/01 2841109
ZNR UUUUU ZZH
R 101109Z OCT 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 0436
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNDT/USMISSION USUN NEW YORK 1586
RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 03 MONROVIA 000793 

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/W, INR/AA, AF/EPS, EB
AID FOR AFR/WA
ACCRA AND DAKAR FOR FCS

E.O.12958: N/A
TAGS: EAGR PGOV EINV EAID SENV LI
SUBJECT: SCENESETTER FOR LIBERIA FOREST INITIATIVE RETREAT

REF: 07 MONROVIA 1090

UNCLAS SECTION 01 OF 03 MONROVIA 000793

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/W, INR/AA, AF/EPS, EB
AID FOR AFR/WA
ACCRA AND DAKAR FOR FCS

E.O.12958: N/A
TAGS: EAGR PGOV EINV EAID SENV LI
SUBJECT: SCENESETTER FOR LIBERIA FOREST INITIATIVE RETREAT

REF: 07 MONROVIA 1090


1. SUMMARY: In the next few months, the GOL intends to award the
last timber concessions on some of the largest tracts of the
nation's forests for a generation. The revenue and employment these
long-term timber concessions will provide is urgently needed.
Regrettably, resumption of commercial timber activities has been
stymied by a faulty prequalification and bid evaluation process for
timber concessions that produced flawed results while unresolved
land and community rights issues threaten to prevent concessionaires
from initiating logging. A rush to award additional concessions for
once-in-a-generation Forest Management Contracts (FMCs) before
resolving these outstanding issues risks undermining the near-term
revitalization of the forestry sector and the longer-term revenue
and employment gains expected from the timber industry. As it
enters its second phase, the Liberia Forest Initiative (LFI) should
focus its efforts on helping the GOL to resolve these urgent issues.
END SUMMARY.

PROBLEMS PLAGUE THE AWARD OF TIMBER CONTRACTS
--------------


2. In its rush to award contracts, the Forestry Development
Authority (FDA) and the Inter-Ministerial Concession Committee
(IMCC) have compromised on prequalification, bid evaluation and due
diligence, resulting in the IMCC's provisional award of three large
Forest Management Contracts (FMCs) to bidders who do not meet the
standards set out in law and regulation and do not have the
financial, technical and operational capability to effectively
manage timber contracts, live up to community obligations, exercise
environmental safeguards, and, ultimately, maximize revenues to
government and employment opportunities. Two of the three
provisional winners do not possess valid prequalification
certificates designed to detect involvement of undesirable
individuals. Also, two of the companies have not demonstrated
assured access to any capital whatsoever.

THE IMPACT OF THE NEW COMMUNITY RIGHTS LAW
--------------


3. The Legislature passed on September 19, 2008 a version of a

Community Rights Law (CRL) that is substantially different from the
version the FDA submitted to the President in August as required by
the National Forestry Reform Law (NFRL). The FDA draft was
developed over a 15-month period in an open consultative environment
and formulated with the guidance of the Governance Commission. The
origin of the version the Legislature ultimately passed is unknown.



4. The two bills are in agreement with respect to broad principles
but differ greatly in how to achieve the objectives of community
empowerment and commercial contracting. The FDA-drafted bill denies
the FDA the mandate to address land issues while the version of the
bill passed by the legislature and pending Presidential signature
obligates the GOL to resolve outstanding land claims before forest
management decisions of any kind are made. The FDA has highlighted
the probable implications of each version to the President and is
urging her to arrive at some compromise between the two. (Note: the
version that passed may also conflict with another law passed this
session creating a National Land Commission charged with
investigating land tenure concerns and make policy recommendations
to the GOL on the most effective ways to address them. End note.)




5. The FDA argues that the version that passed imposes complex
provisions on communities interested in undertaking forestry
activities and forces logging companies to abide by potentially
contradictory rules and procedures established by a multitude of
inexperienced community-level management bodies. It would also
require the FDA, along with international partners, to significantly
restructure their programs and may also undermine the ability of GOL
to implement and adhere to international conventions. Conversely,
the version drafted by the FDA maintains centralized authority over
the timber industry in line with the NFRL and provides broader
requirements for community forestry under a set of regulations that
would be formulated by the FDA in consultation with communities.


6. Comment: The competing versions of the law reflect a deepening
schism between the FDA and key civil society partners with respect
to community rights and pressure from communities for more direct
input on land issues. The relationship between the FDA and civil
society partners deteriorated during the consultation process and
has largely broken down now that both camps have consolidated behind
competing bills. FDA concerns regarding the practical implications

MONROVIA 00000793 002 OF 003


of the law on the nascent timber industry are legitimate and the
manner in which the substitute draft act was submitted is suspect.
But ultimately legislators responded to the will of their
constituency who remains strongly in favor of decentralized control
over land use. End Comment.

THE COST OF DELAY
--------------


7. The FDA awarded three limited duration, small acreage Timber
Sales Contracts (TSC) in February, and the Inter-Ministerial
Concession Committee (IMCC) recently declared provisional winners of
three large-scale, long-tenure Forest Management Contracts (FMCs).
The FDA is currently preparing to tender four larger FMCs of over
770,000 hectares - roughly one-third of the forested lands proposed
for commercial timber for the next 25 years.


8. Of the six smaller TSCs, only one is operational. Two are
stalled due to overlap of the concession area with private deeded
land. None of the FMC winners announced in April 2008 have
mobilized and there are doubts that the winners have the financial
ability to perform. Of the total projection of 100,000 hectares to
have been operational, only 5,000 hectares are close to being
harvested. (Comment: FDA's haste to award contracts by cutting
corners in the due diligence process has resulted in many of the
problems that are slowing up the contracting process. End comment).




9. Ultimately, the delays would make it impossible for the forestry
sector to make its projected contribution to the Poverty Reduction
Strategy in terms of job creation, timber exports and government
revenues. If the CRL passed by the legislature becomes law, there
could also be delays in the operations of concessions in other
sectors such as agriculture and mining while land claims and just
compensation payments to communities are determined.

IS LFI UP TO THE CHALLENGE?
--------------


10. Since its establishment in 2006, the Liberia Forest Initiative
(LFI) - a consortium of forestry sector stakeholders, including USG
(USAID, Forest Service, State),World Bank, European Commission,
FDA, Flora and Fauna International, Conservation International, and
other civil society organizations - has played a major role in
achieving benchmark reforms in the forestry sector. The Concessions
Review, 2006 Forestry Reform Law, associated regulations, and the
introduction of chain-of-custody procedures have laid the foundation
for a transparent, accountable system for allocating timber
concessions in a way that maximizes government revenue and
employment, and ensures responsible forest management.

LFI RETREAT GOALS
--------------


11. During an LFI Retreat in Monrovia October 15-16, participants
will sketch out priorities for "LFI 2" through the end of 2009,
including some discussion of the possible resources, assistance and
partnerships that will be needed to address them. While LFI may
have a limited role in addressing the current imbroglio over the
CRL, it is crucial that LFI help the GOL overcome other challenges
that have delayed the revitalization of the forest sector.


A. Improve the contracting process

The procedure for award of contracts under the Public Procurement
and Concessions Act (PPCA) is generally transparent, accountable and
robust, but the GOL has struggled to comply with the new and complex
procedures and the process remains vulnerable to improper influence
and the temptation to cut corners. Adherence to legal and
regulatory requirements regarding prequalification and bid
evaluation (confirmed by due diligence) is essential. Tighter
screening of bidders will help attract stronger companies and reduce
future problems. Heightened compliance with law, regulation and
industry norms - including more rigorous prequalification screening,
outsourced due diligence, and targeted promotional outreach - will
help attract stronger companies better able to revitalize Liberia's
timber industry -- and to do so quickly. LFI can help the FDA to:

-- Attract stronger companies to bid: The companies that have bid
on the first round of TSCs and FMCs are only marginally qualified,
at best. Weak companies may strain to execute these contacts, to
protect the forests, to live up to their community obligations, and
to exercise environmental safeguards. Stronger companies will
provide information more quickly, which will speed evaluation and

MONROVIA 00000793 003 OF 003


due-diligence. They will mobilize faster. They will be more
capable of meeting community and environmental commitments.

-- Simplify the prospectus: The prospectuses for the first round of
FMCs have taken several months to prepare. For the second round, a
shortage of funding has caused a several-month delay. Simplification
could also save money and shave months off the tendering process
while producing more reliable information.

-- Intensify the prequalification. The current prequalification
process is not screening out companies that are not qualified.
Instead, the FDA is giving prequalification certificates to many
companies that do not meet the standards set out in law and
regulation. Some of these unqualified companies go on to bid. This
bogs down the work of the bid evaluation panel. After the bid, these
companies undergo due diligence. This bogs down of the due-diligence
committee, forcing the committee to process applications that cannot
possibly succeed. Tighter screening at the prequalification means
faster bid evaluation, due diligence, IMC award, and negotiation.

-- Contract out the due diligence: Due diligence is a specialized
skill. It is best performed by law firms, banks or accounting firms.
The FDA does not possess the skills in-house, nor would it make
economic sense to develop these skills. The FDA could, instead,
contract with an outside firm to perform due diligence. The cost of
the due diligence could be assessed to the bidders.


B. Develop a system by which concessionaire performance is measured
and evaluated

International forest management standards exist (FSC, ITTO, and the
EU's VPA model). Currently, the FDA has not adopted a set of
performance criteria by which company performance can be measured,
or developed a framework in which these criteria can be implemented
and enforced.


C. Institute an effective communications strategy

The FDA needs to begin to take a more leadership role in how the
reforms unfold and how the donor partners can be serve the FDA's
long-term interests. Also, since the lifting of the sanctions the
various partners have begun to focus in on their own interest areas
- commercial, conservation and community - and the vision for the
entire sector is being lost. It is clearly the FDA's mandate to
manage and guide developments to prevent the three Cs concept from
actually splintering the forest sector in Liberia. Finally, there
must be a better means to ensure good outreach to stakeholders in
the government, NGOs, civil society, private sector and affected
communities so that the implementation of reforms is also
accompanied by public discussion, comment and education.

ROBINSON