US embassy cable - 01ABUJA2235

NIGERIA: CODEL WATTS AND BIZDEL DISCUSS INVESTMENT CLIMATE WITH PRESIDENT OBASANJO

Identifier: 01ABUJA2235
Wikileaks: View 01ABUJA2235 at Wikileaks.org
Origin: Embassy Abuja
Created: 2001-09-06 15:44:00
Classification: UNCLASSIFIED
Tags: EINV ECON OVIP NI
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 ABUJA 002235 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: EINV, ECON, OVIP, NI 
SUBJECT: NIGERIA: CODEL WATTS AND BIZDEL DISCUSS INVESTMENT 
CLIMATE WITH PRESIDENT OBASANJO 
 
 
1.  Summary: Ambassador Jeter accompanied Codel Watts, AUSTR 
Whitaker and executives from Phillips Petroleum, Syntroleum, 
Proctor and Gamble and Qualcomm to breakfast with President 
Obasanjo.  Pointing to the need for foreign investment in 
non-oil sectors, the President encouraged the U.S. companies 
present to invest in solid minerals, telecommunications, 
information technology, agricultural processing, and 
manufacturing.  Obasanjo was extremely engaged throughout the 
meeting, asking questions regarding AGOA and supporting 
resolution on P&G's advocacy requests.  Following the 
breakfast, Nigeria's President met with the entire business 
delegation.  End Summary. 
 
 
2.  On August 30, Congressmen J.C. Watts (R-Oklahoma), John 
Lewis (D-Georgia), William Jefferson (D-Louisiana) and Eva 
Clayton (D-North Carolina) joined President Obasanjo for 
breakfast at his residence.  Ambassador Howard Jeter, AUSTR 
Whitaker and visiting executives from Phillips, Syntroleum, 
Proctor and Gamble and Qualcomm executives accompanied the 
congressional delegation.  EconOff attended as notetaker. 
 
 
3.  Obasanjo welcomed the U.S visitors and thanked them for 
traveling to Nigeria at an "auspicious time" for foreign 
investment, as Nigeria "moves away from the ills of the 
past."  The GON was in the process of reconstituting both 
Nigeria,s human and physical capital infrastructure, he 
said.  However, Nigeria was "not only looking inward, but 
outward."  Obasanjo expressed the need for Nigeria to engage 
foreign investors outside the oil and gas sector -- in 
telecommunications, information technology, manufacturing and 
the exploitation of solid minerals.  Employing all the right 
buzzwords, Nigeria's President stated that the Nigerian 
market needs more "purchasing power" in order to be more 
active in the world economy. 
 
 
4.  Congressman Watts thanked the President for returning 
early from China to host the delegation.  The Congressman 
explained that he was pleased to have fulfilled the promise 
made during his May visit to Abuja that he would return with 
potential U.S. investors.  In order to fulfill his 
commitment, Watts said, he had brought together the "Trade 
Aid Coalition," comprised of U.S. companies with an interest 
in promoting trade between the United States and Africa.  The 
purpose of the Coalition would be to enhance trade with, and 
economic growth in, Africa. 
 
 
5.  Looking around the room inquiringly, the President noted 
that no serious U.S. construction companies were now active 
in Nigeria.  Ambassador Jeter responded that, while no U.S. 
construction companies had entered the Nigerian market, U.S. 
companies were attempting to enter other non-oil sector 
markets.  The Ambassador specifically pointed to a U.S. 
telecommunications company (read Motorola) that had 
unsuccessfully attempted to enter the market for supplying 
GSM equipment. 
 
 
6.  Philippe Bovay of Proctor and Gamble noted his company,s 
interest in investing USD 30 million in a new manufacturing 
facility in Ibadan.  Bovay commented that he was currently 
working with the Federal Ministry of Industries to resolve 
the problems of high tariffs on P&G,s manufacturing inputs 
and on one P&G product -- Ariel detergent.  The President 
became immediately engaged, began discussing the particulars 
of the proposed investment and said, &I want resolution on 
this issue.8  Bovay explained that P&G had asked for a 
tariff reduction from 30 to zero percent on the manufacturing 
equipment and inputs for its proposed facility.  Although the 
GON had agreed to reduce these tariffs to 10 percent, P&G 
would still like the tariffs reduced to zero.  P&G had also 
requested lower tariffs on its high-quality detergent, Ariel, 
which it would like to manufacture at the new facility. 
Bovay said that P&G had sent a letter asking for resolution 
on this issue in July to the Minister of Industries, but had 
not yet received a response.  Obasanjo commented that he had 
received a similar letter from Proctor and Gamble and 
reiterated that he would like resolution on this issue as 
soon as possible. 
 
 
7.  The President then turned to the need to resolve the 
remaining issues for Nigeria's compliance with the textile 
visa requirements under the Africa Growth and Opportunity Act 
(AGOA).  Ambassador Jeter noted that Nigeria was very close 
to completing the AGOA requirements.  The Ambassador 
commented on the benefits that AGOA could provide within the 
textile manufacturing sector and asked AUSTR Rosa Whitaker to 
explain further.  Whitaker cited Lesotho, a small land-locked 
African nation, as an excellent example: Lesotho had 
attracted over USD 100 million of investment in its textile 
industry in the past several months because of AGOA. 
Whitaker agreed that Nigeria was very close to fulfilling the 
textile visa requirements, explaining that the one unresolved 
issue involved the penalties applied to illegal transshipment 
of goods.  Currently, Whitaker said, Nigeria,s customs code 
only imposed a duty of one-half of the value of the goods ) 
not a sufficient deterrent.  She noted that the countries 
that have successfully met AGOA,s requirements were imposing 
a penalty of at least three times the value of the goods. 
The President reiterated his desire to reach resolution on 
these issues and said that once a bill revising the customs 
code was drafted, he would personally take it to the National 
Assembly and see that it was enacted. 
 
 
8.  Henry McGee of Phillips Petroleum introduced himself and 
said that his company expected to sign the LNG proposal with 
NNPC as early as the week of September 3.  (NOTE.  The MOU 
was signed on September 5.  END NOTE.)  Seemingly familiar 
with the project, President Obasanjo asked whether Phillips 
would be able to complete the project by 2005.  McGee replied 
that the target date was late 2006/early 2007.  However, if 
all project phases proceed smoothly, Phillips could possibly 
shave six to nine months off that time and complete the 
project by early 2006.  President Obasanjo appeared pleased 
with this news. 
9.  Larry Weick of Syntroleum then took the opportunity to 
introduce his company as a prospective investor.  He 
explained that his company could assist Nigeria in three 
areas: to reduce gas flaring, to increase electricity 
production as a byproduct of flared gas, and to more 
effectively use Nigeria,s natural resources through the 
production of clear diesel fuel.  He described Syntroleum's 
Gas-to-Liquid (GTL) process as one that uses air and, 
therefore, was safer than other GTL processes.  President 
Obasanjo held up the small clear vial of Syntroleum,s diesel 
and appeared amazed at how clean the fuel looked.  Obasanjo 
asked whether the fuel would be targeted for export.  Weick 
replied that the diesel could be for both domestic 
utilization and for export to markets in the U.S. and Europe. 
 Obasanjo inquired what quantity of electricity could be 
produced from such a project.  Weick responded that it would 
be dependent upon the location of the projects, adding that 
the NNPC was choosing possible sites based on the need for 
electricity.  Obasanjo asked how expensive the clear diesel 
process was compared with normal diesel refining.  Weick 
replied that Syntroleum's diesel fuel was competitive with 
world oil prices of $18-$20 per barrel.  Seemingly pleased by 
these answers, Obasanjo commented that OPEC was trying to 
maintain prices at roughly $27/barrel, which would make this 
venture worthwhile. 
 
 
10.  After breakfast, President Obasanjo led the group to his 
Council chambers where the remaining members of the business 
delegation were present.  At this larger meeting, which Vice 
President Atitku Abubakar also attended, President Obasanjo 
again welcomed the Congressional and trade delegations to 
Nigeria and noted the need for Nigeria to institute changes 
on the inside while the international community helped 
Nigeria from the outside.  He identified the sectors in 
Nigeria that might most attract foreign investment: 
infrastructure, where he said rehabilitation was already 
underway; agriculture ("ready for modernization"); solid 
minerals, such as aluminum, lead, and zinc; and oil and gas, 
"although more gas than oil," he said.  The President 
explained that the GON was working hard to take advantage of 
the benefits offered by AGOA.  He said he wanted to take all 
steps necessary to make Nigeria internationally competitive. 
The President asked that those present not hesitate to let 
him know, directly or through the U.S. Ambassador, what 
Nigeria needed to do to attract foreign investment. 
 
 
11.  Because Congressman Watt,s was indisposed at this time, 
Ambassador Jeter offered remarks on his behalf.  The 
Ambassador said that, during his visit in May, Congressman 
Watts had promised to return to Nigeria with a trade 
delegation.  With this trip in August, Watts had fulfilled 
that commitment.  The Ambassador commented that there was 
nothing else he would rather see than an increase in U.S. 
investment in Nigeria.  He admitted that there were 
peculiarities to the Nigerian market that had to be overcome. 
 However, the U.S. ) Nigeria strategic relationship must 
include a greater commercial relationship with an emphasis on 
developing the non-oil sectors of the economy. 
 
 
12. President Obasanjo then opened the floor to comments or 
questions from the 30-plus business representatives.  One 
U.S. businessman asked about the legal and regulatory issues 
surrounding the privatization of the national 
telecommunications company, NITEL.  Obasanjo commented that 
the GON had ensured that the future of Nigeria's 
telecommunications market would be driven by the private 
sector; three of the four GSM licenses were granted to 
private companies with one reserved for NITEL.  The President 
referred the legal and regulatory question to Vice President 
Abubakar in his role as Chairman of the National Council on 
Privatization.  Abubakar explained that the GON had already 
received expressions of interest in NITEL from eleven 
international telecommunications companies.  Meanwhile, the 
National Council on Privatization had forwarded to the 
National Assembly a draft bill to strengthen the regulatory 
authority of the Nigerian Communications Commission.  Once 
NITEL had been privatized, the Vice President explained, a 
second carrier would be licensed to establish strong 
competition in the domestic telecommunication market. 
 
 
13.  Comment.  Having just returned from China at 4:00am that 
morning, President Obasanjo surprisingly remained highly 
engaged throughout the meetings.  He was well versed in the 
issues raised by the U.S. companies present at the breakfast 
and expressed strong interest in seeing these issues 
resolved.  The high level of access granted to visitors and 
Mission officers is consistent and demonstrates the emphasis 
that the Obasanjo Administration places on increasing 
bilateral trade and investment with the United States.  Post 
was very pleased to host the U.S. business delegation in 
Abuja.  The wide-ranging interests of participants made it 
difficult to effectively "match-make" them with Nigerian 
businessmen and GON officials, however.  A tighter focus on a 
few specific sectors, such as those identified by the 
President -- agriculture/processing, solid minerals, 
telecommunications and infrastructure -- would make future 
trade delegations even more effective tools for strengthening 
bilateral economic relations.  End Comment. 
 
 
14.  This cable was not cleared with the CODEL. 
Andrews 

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