US embassy cable - 02ABUJA1396

UNCLAS ABUJA 001396 
 
SIPDIS 
 
 
DEPT FOR E:ANNE PENCE AND AF/W DON BOOTH 
 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, NI 
SUBJECT: NIGERIA: PROCTOR AND GAMBLE DETERGENT COULD BE 
'GRANDFATHERED' UNDER OLD TARIFF RATE 
 
 
REF: A. A) LAGOS 908 
     B. B) ABUJA 1163 
     C. C) LAGOS 725 
 
 
 1. In a April 12 meeting with the President's Principal 
Secretary Stephen Oronsaye and the President's Special 
 
SIPDIS 
Assistant for Budget Oby Ezekwisili, Ambassador Jeter raised 
Proctor and Gamble's concerns over the recent hike in tariffs 
on detergent from 40 percent to 100 percent.  The Ambassador 
said that the U.S. company would not be able to sustain its 
domestic manufacturing capability in Nigeria without lower 
tariffs on its detergent, Ariel.  P&G's proposed $30 million 
investment in a greenfield factory in Ibadan would be halted 
if the tariff increase were not rescinded. 
 
 
2. Oronsaye and Ezekwisili unambiguously responded that, 
under no circumstances, would the tariff hike be reversed; 
because the increase was designed specifically to protect 
domestic manufacturers of detergent.  Proctor and Gamble is 
not manufacturing detergent in Nigeria, but importing it in 
bulk for local packaging, Oronsaye noted.  At the 
Ambassador's insistence, Oronsaye conceded that perhaps P&G 
could be 'grandfathered' to enable them to import Ariel 
detergent under the old 40 percent rate for a specified time 
and at an agreed upon volume.  Oronsaye thought this might be 
possible with a commitment from P&G to begin detergent 
manufacturing in Nigeria no later than 2.5 years following 
the grant of the grandfathered concession by the GON. 
 
 
3. Comment. The GON position on P&G's request for lower 
tariffs is unequivocal. Oronsaye and Ezekwisili are two of 
President Obasanjo's closest advisors on economic and 
budgetary issues and both influence and reflect his thinking. 
 Post has recommended to Proctor and Gamble that it consider 
making a formal request to the GON to 'grandfather' Ariel 
detergent.  Oronsaye's proposal would obviously be subject to 
negotiation.  Two and a half years at the status quo ante 
rate might allow P&G to begin the manufacture of Ariel in 
Nigeria.  The company could then benefit from the high tariff 
on detergent.  End Comment. 
JETER