NIGERIA: BI-WEEKLY POL/ECON UPDATES FOR JUNE 15-30, 2009

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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

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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

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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