US embassy cable - 02ABUJA2961

UNCLAS SECTION 01 OF 02 ABUJA 002961 
 
SIPDIS 
 
 
STATE FOR AF/W, AF/EPS 
STATE PASS USTR 
STATE PASS DEPARTMENT OF ENERGY 
 
 
E.O. 12958: N/A 
TAGS: ECON, EPET, EINV, EAIR, NI 
SUBJECT: NIGERIA: ECONOMIC ROUNDUP OCTOBER 30 
 
REF: ABUJA 2768 
 
 
1. This periodic economic report includes: 
--U.S.-Nigeria Air Cargo: Taking Advantage of AGOA 
--GON Re-Thinks Nigeria Airways Deal 
--GON to Set Domestic Content Requirement for JV Oil Contracts 
--Local Concerns Over Niger Delta Dredging 
 
 
U.S.-Nigeria Air Cargo: Taking Advantage of AGOA 
--------------------------------------------- --- 
2. U.S. Export-Import Bank Director Joseph Grandmaison and 
Ambassador Jeter met Minister of Aviation Kema Chikwe in 
Abuja last week to encourage Nigerian participation at the 
November 19-20 African Regional Air Cargo Transport 
Initiative forum in Washington, D.C. A U.S. Trade and 
Development Agency (TDA) consultant made the same pitch last 
week to Lagos-based officials at the Ministry of Aviation, 
Nigerian Civil Aviation Authority, and Federal Airport 
Authority of Nigeria (FAAN). The air cargo initiative, 
sponsored by TDA, the Department of Transportation, and the 
Ex-Im Bank, seeks to encourage air cargo transport between 
Africa and the United States and, indirectly, bilateral trade 
under AGOA. Grandmaison explained in his meeting with Chikwe 
that much of the tariff savings under AGOA are unrealized 
because shipping--most often via Europe--is costly for trade 
between the United States and Africa, nullifying the 
advantage to Africa that AGOA was designed to bestow. 
 
 
3. The TDA consultant reports that FAAN officials in Lagos 
recognize the benefits of a strong air cargo link to the 
United States. In anticipation of increased air cargo 
traffic, FAAN is expanding cargo facilities at Murtala 
Muhammed Airport in Lagos, and in August, a team from the 
U.S. Transportation Security Administration conducted cargo 
security training for FAAN officials. 
 
 
GON Re-Thinks Nigeria Airways Deal 
---------------------------------- 
4. The deal signed June 28 between UK-based Airwing Aerospace 
and the Ministry of Aviation to restructure Nigeria Airways 
as a joint venture called Air Nigeria is coming under 
increasing scrutiny (reftel). President Obasanjo has stepped 
into the fray, calling for the establishment of a ten-person 
committee to review the Air Nigeria deal and chart a new way 
forward for a Nigerian national carrier. The Bureau of Public 
Enterprises' Director of Operations Tijjani Abdullahi 
promises Econoff that additional details on the committee 
will be available in the weeks to come. 
 
 
GON to Set Domestic Content Requirement for JV Oil Contracts 
--------------------------------------------- --------------- 
5. Group Managing Director of the Nigerian National Petroleum 
Corporation (NNPC) Jackson Gaius-Obaseki is reported in the 
local press as having announced in Ulsan, South Korea, that 
future contracts for joint ventures in oil and gas 
exploration and extraction will include a 25 percent 
local-content requirement. He suggested that basic 
construction and engineering, in particular, could be 
procured locally. Separately, Chairman of the Senate 
Committee on Petroleum Resources David Brigidi told Econoff 
that the National Assembly is considering a "Local Content 
Act" that would likely be passed this year. The current draft 
of that bill does not specify the amount of local content 
that would be required. (Comment: To date, there has been no 
discussion of how that local content would be procured, 
whether in foreign exchange or Nigerian naira. End Comment.) 
 
 
6. Oil executives in Lagos and Port Hartcourt told Econoffs 
that these new policies would pose major obstacles for future 
investments. However, there appears to be confusion among 
them about the amount of domestic content that would be 
required, with estimates ranging from 30 to 50 percent. Post 
will follow this issue closely. 
 
 
Local Concerns Over Niger Delta Dredging 
---------------------------------------- 
7. Chief Dr. E.A. Emerhi, national president of Nigeria's 
office of the International Association for Impact 
Assessments (IAIA), told Emboffs that the IAIA has not yet 
staked out a position on whether the Niger River should be 
dredged. Emerhi discussed the perspectives of large-scale 
traders (who support the project) and smaller farming 
communities (who oppose it). The Nigerian delegation to the 
November 7-8, 2002, conference sponsored by Tulane University 
and the U.S. Army Corps of Engineers in New Orleans on 
"Comparing Rivers: The Mississippi and the Niger" will 
include members of diverse ethnic and geographical background 
as well as government, academic, and private sector 
representatives who will present these viewpoints. 
 
 
8. Emerhi said that the GON has not yet demonstrated the 
capacity nor will to address local concerns over the proposed 
dredging project, but she is hopeful that government 
officials will become more sensitive to these concerns 
through participation in conferences like the one being held 
next month in New Orleans. 
JETER