US embassy cable - 02ABUJA1630

UNCLAS SECTION 01 OF 02 ABUJA 001630 
 
SIPDIS 
 
 
DEPT PASS TO DOT FOR SAMPLE 
 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, SENV, EWWT, NI 
SUBJECT: DOT TEAM VISIT - PROGRAM IS ON COURSE 
 
 
1.  Summary.  A DOT team led by Senior Policy Advisor Kevin 
Sample visited Nigeria April 13-26 to complete security and 
environmental assessments at the Lagos Port Complex and to 
discuss privatization of port services in Nigeria.  The DOT 
officials met the Senate Committee on Marine Transport, 
officials of the Bureau of Private Enterprises (the GON 
privatization agency), and the Ministry of Transport.  The 
team recommended that privatization of port services follow a 
phased approach, emphasizing the need to include labor in the 
planning and implementation process.  The GON appears 
committed to port privatization, although much work remains 
before Nigeria can become a regional maritime hub.  Problems 
include the current policy of 100% port inspections and the 
need to develop an adequate internal transportation 
infrastructure. End Summary. 
 
 
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Meeting With Senate Committee on Marine Transport 
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2.  On April 17, the DOT team briefed the Senate Committee on 
Marine Transport on their mission in Nigeria, which was well 
received by the Committee.  Committee members agreed port 
services needed to become more efficient and container 
handling costs reduced for Nigeria to become a maritime hub 
in West Africa, and that the best avenue to increase 
efficiency and lower costs would be through private sector 
participation. 
 
 
3.  DOT Senior Advisor Kevin Sample advised that port 
privatization should be a phased process, involving training 
and re-absorption of labor into the general workforce, with 
the eventual aim of reducing labor opposition to 
privatization.  The Senators agreed with Sample that 
privatization should not be rushed, and requested USG 
assistance in the retraining of redundant port workers.  The 
Committee emphasized that port privatization is politically 
sensitive due to the fear that workers would be laid-off and 
unemployment would rise.  Sample advised that maritime 
workers should be included in the privatization decision 
process in order to harmonize the views of all stakeholders 
and minimize problems. He also believed the GON should 
emphasize that only selected services at the ports should be 
privatized, not the entire port.  The Senators thought that 
"private sector participation" instead of "privatization" was 
a more apt and palatable term. Sample said DOT might be able 
to assist by organizing a tour of the Mexican ports in 
collaboration with the World Bank, for the Nigerian officials 
as an example of a successful port privatization. 
 
 
4.  Sample also advocated creation of a mechanism to reduce 
corruption in the maritime sector and to ensure that maritime 
sector funding is applied judiciously. 
 
 
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Meeting With Minister of Transport 
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5.  In the meeting with the Minister of Transport Chief Ojo 
Maduekwe and other top Ministry officials, the fight against 
corruption was reiterated.  The Minister thanked the U.S 
government for assisting in training officials of his 
Ministry on anti-corruption, and asked for more of such 
assistance. 
 
 
6. The Minister explained his plans to visit Washington June 
3-11 and asked for DOT assistance in scheduling appointments 
with USG officials.  Sample agreed to put together a program, 
including a visit to some U.S. ports and a meeting with 
Secretary Mineta.  The Minister praised the efforts of the 
 
SIPDIS 
DOT in helping Nigeria's transportation sector, and asked for 
continued cooperation between the GON and DOT. 
 
 
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Meeting With Bureau of Public Enterprises (BPE) 
--------------------------------------------- - 
 
 
7.  The DOT team also met officials of BPE, the GON 
privatization agency.  Sample explained DOT's current mission 
in Nigeria and offered assistance in privatizing port 
services.  The port privatization team leader Hassan Usman, 
stressed that privatization of port services is on course 
using the "Landlord Port Model."  Usman said BPE was hosting 
workshops to sensitize state governments, labor and civil 
society on port privatization, and reiterated BPE,s aim to 
privatize the port services of one of Nigeria's eight ports 
before the end of the year.  Sample advised that labor should 
be fully involved in the privatization process to ensure a 
smooth transition.  Usman agreed, commenting that this was 
the goal of the workshops as was evident from the communiqu 
adopted by stakeholders at one of the workshop sessions. 
Sample also advised that port privatization should not be 
rushed, but rather be a phased process. 
 
 
8.  The DOT technical team offered to assist the BPE in 
training officials, and resolved to work closely with the BPE 
to ensure a successful privatization of port services.  Usman 
welcomed DOT's offer of assistance. 
 
 
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Comment 
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9.    The GON's resolve to privatize selected port services 
was clearly evident throughout the visit to Abuja.  However, 
at the Lagos Port Complex the issue of privatization is so 
sensitive that Nigerian Port Authority (NPA) managers refused 
to discuss the topic in the presence of NPA junior staff.  In 
addition, the GON must surmount a number of other hurdles if 
port services are to become more efficient and less corrupt. 
Nigerian ports also have often been sites of violent labor 
protests-- usually involving privately hired dock workers. 
Several weeks before the DOT team's visit one such protest 
sparked a disturbance at the Lagos Port, and reportedly 
authorities are yet to put in place an effective system to 
handle these volatile situations. 
 
 
10.   The issue of immediate concern to port managers is the 
June 2001 policy of 100% inspection.  This policy has 
increased average clearance time from 20 to over 30 days, and 
NPA officials claim 100% inspection "will only lead to 
disaster."  They point to increased stress on equipment 
caused by repetitive repositioning of containers, and also 
allege 100% inspection fuels corruption.  NPA officials 
explained that the more hands that come in contact with a 
container the more opportunities for pilferage and bribery 
(the more difficult the clearance process the more "dash" 
required to smooth the way). 
 
 
11.   Port officials are searching for alleviation to 100% 
inspection, but for now the GON appears intent on maintaining 
this controversial policy.  Meanwhile, the Lagos container 
terminal is reportedly home to an estimated 1,000 abandoned 
containers left over from the initial days of 100% 
inspection. No one wants to step forward to claim spoiled 
foodstuffs, or in certain cases -- illicit or undervalued 
goods. 
 
 
12.   Many observers opine that if Nigeria is to become a 
regional maritime hub, port services have to be delivered in 
a more efficient way, corruption must be eradicated at the 
ports, and labor unrest at the ports must be curtailed. 
 
 
ANDREWS