|09ABUJA2046||2009-11-12 17:02:00||CONFIDENTIAL||Embassy Abuja|
VZCZCXRO6240 PP RUEHBZ RUEHDU RUEHMR RUEHPA RUEHRN RUEHTRO DE RUEHUJA #2046/01 3161702 ZNY CCCCC ZZH P 121702Z NOV 09 FM AMEMBASSY ABUJA TO RUEHC/SECSTATE WASHDC PRIORITY 7457 INFO RUEHOS/AMCONSUL LAGOS 2269 RUEHLO/AMEMBASSY LONDON 0606 RHMFISS/HQ USAFRICOM STUTTGART GE RUEHZO/AFRICAN UNION COLLECTIVE RUEHZK/ECOWAS COLLECTIVE RHEHNSC/NSC WASHINGTON DC RUEAIIA/CIA WASHINGTON DC RUEKDIA/DIA WASHDC RHMFISS/HQ USEUCOM VAIHINGEN GE
C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 002046
1. (C) Mission Nigeria has met several times to review current and
proposed initiatives to improve transparency, administration, and
performance of the power generation and hydrocarbon sectors under the
framework that could be part of the Binational Commission (BNC)
Energy and Investment Working Group. The Mission will provide a game
plan for each of the proposed BNC working groups. Reftel is the
Elections Working Group Action Plan that has already been shared with
the Department. END SUMMARY
Current USG Energy Sector Activities
2. (SBU) The Mission's current workplan seeks to provide a framework
for systematic, strategic assistance to Nigeria in the energy sector
to support the development of oil, gas and alternative energy
sources. The US Government has been actively engaged in a number of
areas over the last 12 months designed to assist the Nigerians to
increase energy outputs, improve distribution and reduce energy waste
and environmental degradation. Examples of specific assistance
to-date that can be built on and what we propose for the Energy and
Investment Working Group listed below. We have also indicated what is
in progress, funded and where funding is needed in all the sectors as
-- LPG Framework Study: As a result of two USTDA studies in 2007, the
GON developed its current effort to use LPG for cooking, and to have
a small hydro-electric project at the Kiri Dam in Adamawa state.
USTDA also conducted a November 3-7, 2009 Definition Mission to
review Ministry of Petroleum and Nigerian National Petroleum Company
(NNPC) projects for the financing of potential feasibility studies.
Technical assistance is also being provided for the Shiroro/Egbin
Power Plants. Kiri Dam and Shiroro projects are in progress and
--USAID and the Nigerian Electricity Regulatory Commission (NERC) and
the U.S. Michigan State Regulatory Commission partnership through the
National Association of Regulatory Utility Commissioners (NARUC) has
been funded for a second year. In progress and funded.
--USAID is providing technical assistance through a Public Private
Partnership with the Independent Power Producers. This partnership
has been active for a year. USAID technical assistance includes
training and IPP financing models through Nexant. In progress and
--USTDA has also provided a technical assistance program on Health
and Safety Standards,their implementation and enforcement in Nigeria.
Implemented and funded.
--The FCS brings Nigerian business and government leaders to
energy-related trade shows in the US on a regular basis and has done
several over the last 12 months, including conducting due diligence
background reports in support of any project with US bank
--OPIC supports a number of energy projects including co-generation
power plants for Coca-Cola bottling in Nigeria. In progress with
OPIC guaranteeing the partial loan risk.
--EXIM bank is providing credit guarantees to a number of projects.
Q--EXIM bank is providing credit guarantees to a number of projects.
Last year they organized a seminar for IPP, banks and government
officials on project finance. Ongoing support of credit guarantees.
--USCS provided assistance to coordinate a three-way waste to energy
partnership between the US private sector, a Nigerian private company
and Lagos state government.
Proposed USG Energy Sector Activities
ABUJA 00002046 002 OF 003
3. (C) As part of the BNC game plan on Energy and Investment, Mission
Nigeria will focus future activities in the energy sector to support
GON actions to address energy issues, including new legislation (e.g.
the Petroleum Industry Bill (PIB)) and its impacts. These proposed
activities could include:
--Discussing comparative models for the PIB with the GON, and endorse
independent scenario modeling along the lines of the Cambridge Energy
Research Associates (CERA) proposal. Unfunded.
--Assisting the GON with the creation of independent regulatory
petroleum institutions following the enactment of the PIB to ensure
conformity with global industry standards and practices. Currently
unfunded, but USTDA is recommending this to their Board.
--Providing technical assistance to develop a national database for
better transparency between oil and gas companies and their new
regulators. This will address the GON's desire for all geological,
technical and well data to be accessible to all interested parties
and NEITI's desires for access to real-time transactions to monitor
financial flows. Currently unfunded, but USTDA is recommending this
to their Board.
--Providing technical assistance for the rehabilitation of Nigeria's
four refineries to enhance production, reduce refined product
imports, and create jobs which would advance technical training.
Currently unfunded, but USTDA is recommending this to their Board.
--Providing technical assistance for a project on pipeline security
given that vandalism is a problem. The existing pipeline is 27 years
old and needs to be re-laid. Currently unfunded, but USTDA is
recommending this to their Board.
4. (C) Providing technical assistance in three specific areas,
including pricing, infrastructure development, and project sequencing
and timing. The goal is to capture wasted energy and, as a side
benefit, reduce environmental pollution generated through gas
--Providing technical assistance for Synfuels International/Texas A&M
technology in small-scale gas-to-liquids (GTL) plants in the Niger
Delta to end gas flaring and use the liquids, purified water and
excess power for sustainable commercial, industrial and residential
use in small communities. We note that USAID believes GTL is not
economical in current circumstances; USTDA is conducting its own
analysis. Currently unfunded, but USTDA is recommending this to
--Using an existing USG study, assist the GON with the development of
the Nigerian gas transmission system. The GON may also need help
with the gas aggregator. This will provide an opportunity for the US
to promote downstream business opportunities with refineries and LPG.
--Providing technical assistance for the development of new gas
processing, distribution and storage infrastructure; establishment of
a pilot project for the use of LPG for cooking and automobiles; and
the creation of incentives for the conversion of gasoline to LPG
powered vehicles. Unfunded.
5. (C) Providing assistance on regulatory issues, payment guarantees
and standard power agreements to make gas power projects attractive
Qand standard power agreements to make gas power projects attractive
to IPPs; assist with the development of a roadmap to overcome
existing barriers to IPPs; and to scale up operating IPPs. Ongoing,
but additional funding will be required.
6. (C) Providing technical assistance for small, micro hydroelectric
power projects. Unfunded.
7. (C) Responding to GON request for assistance with customer service
in the power distribution sector. USTDA is seeking approval to
conduct a Power Definition Mission in January 2010, which could
ABUJA 00002046 003 OF 003
include the GON request. In progress.
8. (C) Encouraging the GON to achieve EITI certification by the March
2010 deadline. Assisting NEITI to replicate EITI controls at the
state and local levels. More funding needed.
Renewable Energy, Biofuels and Solar
9. (U) The US Mission could explore other opportunities to support
solar power and renewable waste management opportunities, biofuel and
hydro-electric power projects such as the one at the Kiri Dam in
Adamawa state, the waste management project in Lagos that was
mentioned above, and under self-help projects.
10. (C) Mission Country Team Members are coordinating closely on
types of assistance that the USG can provide to the energy sector in
support of the BNC initiatives. Working together, the USG and GON
will use the World Bank "Doing Business" indicators as an internal
tool for measuring progress on transparency and reform and measuring
results in the energy sector.