Identifier
Created
Classification
Origin
09NIAMEY371
2009-05-21 11:52:00
UNCLASSIFIED
Embassy Niamey
Cable title:  

NIGER'S EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE: SLOW

Tags:  EAID ECON ENRG EMIN EPET PGOV PREL NG 
pdf how-to read a cable
VZCZCXRO9950
RR RUEHMA RUEHPA
DE RUEHNM #0371/01 1411152
ZNR UUUUU ZZH
R 211152Z MAY 09
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 5052
INFO RUEHFR/AMEMBASSY PARIS 0842
RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 03 NIAMEY 000371 

DEPT FOR EEB/ESC/IEC/ENR, AF/W

PARIS PASS TO AFRICA WATCHER

SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON ENRG EMIN EPET PGOV PREL NG
SUBJECT: NIGER'S EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE: SLOW
START AND LIMITED COMMITMENT

REF: STATE 28858

UNCLAS SECTION 01 OF 03 NIAMEY 000371

DEPT FOR EEB/ESC/IEC/ENR, AF/W

PARIS PASS TO AFRICA WATCHER

SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON ENRG EMIN EPET PGOV PREL NG
SUBJECT: NIGER'S EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE: SLOW
START AND LIMITED COMMITMENT

REF: STATE 28858


1. SUMMARY: Niger was admitted as an EITI candidate country in
September 2007, but has yet to publish a public accounting of
government revenues from mining and other extractive industries.
Niger's EITI Coordinator expresses confidence that an initial
reconciliation will be published in June based on the 2005-2006
audited results for the three mining operations with majority
foreign ownership, and that Niger will complete the EITI validation
process by the deadline of March 2010. Civil society groups active
in the EITI process did not agree to limiting the scope of the
report, and they argue that a comprehensive EITI process should
address the politically charged issues of payments for exploration
permits issued since 2007 and the petroleum production agreement
signed with the Chinese in 2008. End summary.

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EITI NIGER COORDINATOR EXPRESSES CONFIDENCE
--------------


2. On May 6, Econoff and LES Econ Assistant met with Abdoul Aziz
Askia, Coordinator of Niger's Extractive Industries Transparency
Initiative (EITI),as requested in reftel, to assess Niger's
progress in meeting the EITI validation deadline of March 2010.
Abdoul Aziz expressed confidence that Niger is on track to complete
the validation process well before the deadline of March 9, 2010.
An ambitious plan of action was presented to donors and other
interested parties in December 2008, but delays in funding slowed
implementation until French President Sarkozy made the EITI process
the focus of his March 27 visit to Niamey. Sarkozy, Niger Prime
Minister Seini Oumarou, and EITI Board Chairman Peter Eigen all
expressed commitment to Niger's EITI process during a highly
publicized roundtable meeting at which Sarkozy announced that France
would provide an additional 140,000 euros funding for EITI Niger.
The French donation, combined with US$245,000 from the World Bank
and US$45,000 from UNDP, will fund a more modest EITI program

through June 2010. The Government of Niger (GON) contributes 20
million CFA (approximately US$40,000) annually to cover basic
expenses of the Secretariat, which has been relocated from the Prime
Minister's Office to an independent office.

-------------- --------------
CIVIL SOCIETY GROUPS ARE COMMITTED BUT LESS CONFIDENT
-------------- --------------


3. Despite Abdoul Aziz's confidence and enthusiasm, and the
publicity boost of the March 27 roundtable, Niger has yet to issue
its first report. Abdoul Aziz stated that the first report is due
in June and will be based on audited accounts of the three largest
mining companies for the period 2005-2006. This would not cover
other extractive industrial units operating in Niger during that
time period, such as the government-owned coal company SONICHAR, a
gypsum mine, and artisanal gold mining. According to Abdoul Aziz,
these other operations were excluded because they did not provide
government revenues above a threshold level. He commented that the
second report, covering 2007-2008, may expand coverage to additional
companies and take into account the public response to this first
effort. Abdoul Aziz earlier used the audited results provided by
these companies to do a "dry run" of a first report. According to
civil society participants in the multi-stakeholder group, there was
no consensus on limiting the scope of formal reconciliation, but the
consultant is working on that basis. (Comment: Abdoul Aziz appears
to be advocating that the limitation is the only way to meet the
time constraints of the validation schedule. End comment.)



--------------
MEMBERS OF THE MULTI-STAKEHOLDER GROUP
--------------


4. Socit des Mines de l'Aor (SOMAIR) and Compagnie Minihre
d'Akouta (COMINAK) produce uranium ore, and are majority owned and
operated by French power parastatal AREVA. Societe Miniere Liptako
(SML),Niger's only commercial gold mine, is majority owned by two
Canadian mining companies, one of which operates the mine. The GON
is a shareholder in all three companies, with 37% of SOMAIR, 31% of
COMINAK, and 20% ownership in SML. All three companies are
represented in the EITI process.


5. Civil society organizations active in the EITI process include
the local chapter of Transparency International; Reseau des
Organisations pour la Transparence et l'Analyse Budgetaire (ROTAB),
a local non-governmental organization (NGO) affiliated with "Publish
What You Pay," that represents a network of civil society
organizations interested in budget transparency; Groupe de Reflexion
sur les industries Extractives (GREN),a domestic NGO that has

NIAMEY 00000371 002 OF 003


published reviews of the gold sector; and the private press.


6. EITI Niger benefits from high-level political involvement.
Mohamed Abdoulahi, Minister of Mines and Energy, was chosen as
President of the implementing committee, and the Ministry of the
Economy and Finance is also very involved. Other government
ministries participate when EITI takes up an issue of particular
interest to them.

--------------
THE EITI PROCESS IN NIGER: EMPTY MOMENTUM?
--------------


7. Abdoul Aziz previously worked for the Office of the Prime
Minister, and the organization was based initially within it. It
recently moved to separate offices located in an older home that is
only partially converted for business use. In addition to
reconciliation reports, EITI Niger initiatives include capacity
building, particularly for local NGOs, and development of a
communications strategy to ensure that EITI activities, including
the first report, reach the broadest possible national audience.
The small staff and spare environment do not appear equipped to
manage the ambitious work plan and complete validation by March
2010, especially given the busy travel schedule of the coordinator,
who was elected as one of two francophone representatives to the
EITI international board.


8. The process of generating an EITI reconciliation report is
actually carried out by an independent consultant acting as the
administrator. According to Abdoul Aziz, EITI Niger plans to
identify and hire the independent administrator immediately, so that
the first report can be delivered in June. (Note: This time frame
would only be possible if the initial report is, as he proposes,
limited to the results of the three companies that have already
provided their audited results. End note.)


9. The process of validation also requires the involvement of an
independent consultant, who must be selected from a list of
individuals approved as "validators" by the EITI international
secretariat. The validation process is not an audit, but rather an
evaluation of the implementation of the EITI process in consultation
with all parties involved. The validator verifies that the outcomes
of the process conform to EITI global standards and identifies ways
in which the EITI process can be strengthened in the future. Abdoul
Aziz claims that EITI Niger will be ready to initiate the validation
process very soon, and that there would be no problems in meeting
the March 2010 deadline.

--------------
CIVIL SOCIETY TAKES THE INITIATIVE
--------------


10. The civil society participants in Niger's EITI process appear to
have accepted that the initial reconciliation report will be limited
to three companies and the 2005-2006 time period. To address the
limited scope and reinforce the EITI process, and with the financial
support of Revenue Watch Institute (RWI),ROTAB will sponsor a
"Forum on Extractive Industries" in Niamey, July 13-15, 2009. The
Forum will look at three mining projects: the Samira gold mine
(which is included in the proposed EITI review),the Agadem oil
project, and Imouraren, the huge new uranium project that AREVA is
developing. The companies will present information on their
projects, and the Forum will include groups that are not included in
the EITI stakeholder group, including parliamentarians, academics,
and local authorities. The general objective of the Forum is to
provide more information about the projects, improve transparency
regarding actual and anticipated revenues, and ensure that those
revenues are used equitably for the enduring and sustainable
development of Niger. The Government of Niger is represented in the
schedule, but has not yet confirmed participation in the event.

--------------
COMMENT
--------------


11. While it would be quick and easy, a reconciliation report based
on the 2005-2006 audit reports of three companies will be little
more than a pro forma exercise, and will not cover many of the
controversial or disputed sources of government income from
extractive industries in Niger. That time period predates GON
actions to open new areas for mineral exploration, which generated a
huge wave of exploration contracts in 2007 and 2008. Moreover, the
current EITI Niger work plan limits review to the audited results of
companies that are actively producing, effectively excluding
payments for exploration contracts.


12. The Government of Niger does not have a record of transparency,

NIAMEY 00000371 003 OF 003


and has yet to release detailed information on major new
investments, including the Chinese petroleum production agreement.
Just this week, GON allies in the National Assembly defeated a
proposed inquiry into alleged irregularities in the process of
granting mineral exploration contracts. Unless the scope of inquiry
is expanded to include payments for exploration contracts and the
terms of new contracts, the EITI process in Niger will not address
public concerns about corruption in the process of allocating the
exploration permits and/or negotiating initial project terms. Civil
society organizations are attempting to address some of these
deficits through a public Forum on Extractive Industries, but the
Government of Niger has not yet demonstrated a willingness to
support that effort. End comment.

ALLEN