NIGERIA: BINATIONAL COMMISSION ENERGY AND INVESTMENT WORKING

C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 002046 SIPDIS STATE FOR AF/FO, AF/W, AF/RSA, DRL, INR/AA, S/CIEA, AF/PDPA USAID FOR AFR/WA (DALZOUMA) E.O. 12958: DECL: 11/09/2019 TAGS: PGOV PREL PHUM PINS PTER KDEM NI SUBJECT: NIGERIA: BINATIONAL COMMISSION ENERGY AND INVESTMENT WORKING GROUP GAME PLAN REF: ABUJA 2016 Classified By: Ambassador Robin R. Sanders for reasons in Sections 1.4. (B) and (D) ¶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 follows: -- 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 funded. --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 funded. --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 involvement. --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 Petroleum -------------- ¶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. -------------- Gas Flaring -------------- ¶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 flaring. Unfunded. --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 their Board. --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. Unfunded. --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. -------------- COMMENT -------------- ¶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. SANDERS