Cablegate: Nigeria: Usg Collaborates with World Bank & Dfid to Assist

VZCZCXRO7878
PP RUEHMA RUEHPA
DE RUEHUJA #1942/01 2771159
ZNR UUUUU ZZH
P 031159Z OCT 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4071
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 0014
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 001942

SENSITIVE
SIPDIS

DEPT PASS TO USTR- AGAMA AND USTDA - FITTS/MARIN
DEPT OF ENERGY FOR CAROLYN HAYLOCK AND GEORGE PERSON
USAID AFR/SD FOR MICHAEL CURTIS

E.O. 12598: N/A
TAGS: EPET ENRG ECON PGOV EAID PREL NI
SUBJECT: NIGERIA: USG COLLABORATES WITH WORLD BANK & DFID TO ASSIST
GAS SECTOR

REF: A. ABUJA 1930
B. ABUJA 1563
C. ABUJA 1311

SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE USG

1. (SBU) SUMMARY. Ambassador Sanders met with the Minister of Energy
(Gas) Odusina on September 25 and offered U.S. support to assist
with implementing the GON's gas policy, master plan, and pricing
formula, funded through the Africa Infrastructure Program (AIP)
program funded and managed by USAID. This assistance follows months
of discussions among the USG, World Bank, and the United Kingdom's
Department for International Development (DFID). The international
community has pooled expertise and budgets to reach out to the GON
to provide a successful way forward toward the implementation of the
GON's gas policy and plan. The assistance focuses on a solution to
the immediate problem of a significant shortfall of gas for domestic
utilization. The shortfall is seen to directly threaten the
economic aspirations of the nation, due to lack of electric power
and feedstock for industry. The assistance will be coordinated with
complimentary programs of the World Bank and DFID. END SUMMARY.

2. (SBU) On September 25, the Ambassador, AIDOff and consultant, and
EconOff, met with the Minister of Energy (Gas) Odusina to discuss
the Minister's plans for the gas sector. The Minster explained that
oil was discovered in Nigeria in 1955, but there had been no serious
discussion about gas until the past two years when the need for
domestic gas became critical. He continued by illustrating that
Nigeria's forecast for natural gas requires it to grow from a level
of 4 billion cubic feet per day (bcf/d) to about 20 bcf/d by 2010.
In the short term, he said the demand growth is underpinned largely
by the power sector crisis and by an increasing requirement by large
industries such as fertilizer and methanol. The government of
Nigeria (GON) has been unable to meet demand via existing gas
policies and the gas master plan. Currently, the GON has mandated
gas, through regulation, from the international oil companies
(IOC).

3. (SBU) The Minister expects, through its gas master plan, that
Nigeria will become a major player in the international gas market
as well as laying a solid foundation for the expansion of gas supply
infrastructure within the domestic market. (NOTE: Since coming into
office in May 2007, President Yar'Adua has given approval to
guidelines aimed at realizing this vision through its gas master
plan. The plan's Blueprint was approved by the Federal executive
Council in February 2008. The mandated (regulated) gas supply
obligation was transmitted to the Joint Venture Companies in August
2008 requiring implementation of the gas obligation for the domestic
market to begin no later than October 15, 2008 (reftel A). The
GON's policy has not been received well by IOCs and other investors
to-date. END NOTE)

4. (SBU) The discussion between the Minister and the Ambassador led
to agreement to expand U.S. cooperation through USAID's newly
launched Sub-Saharan Africa Infrastructure Program (AIP). The
cooperation will begin in October 2008. (NOTE: AIP is part of the
$200 million five-year U.S. Presidential African Global
Competitiveness Initiative, which seeks to expand trade between
Nigeria and the U.S. and other trade partners. The primary goal of
the AIP is to foster over $1.0 billion of investments in
infrastructure throughout sub Saharan Africa within the next few
years. END NOTE).

5. (SBU) Prior to the Ambassador's meeting with Minister Odusina,
USAID, and EconOff met with the Ministry's technical experts to
discuss Nigeria's gas master plan and the current situation in the
gas industry. Following this meeting USAID met with the World Bank
and the DFID to discuss a joint effort to provide technical
assistance to Nigeria. Agreement was reached on the critical needs
of Nigeria's energy sector and how USAID, World Bank, and DFID could
jointly assist. The Ambassador shared this information with the
Minister explaining that the task of Nigeria's implementation of its
gas plan was bigger than any one entity could tackle alone.

6. (SBU) COMMENT: Domestic gas quantities are inadequate for
existing electricity power plants and not available for the new
plants (NOTE: three of ten new plants are commissioned and do not
have gas to operate END NOTE). In May 2008, the Embassy discussed
the problems with the World Bank and asked if it would lead an
energy committee of all donors and stakeholders to determine both a
consensus and priority of need and how the international community
could reach out to the GON in a coordinated effort. The World Bank
embraced this idea and launched the Energy Sector Partners
Coordination Forum. This is the platform that allowed the

ABUJA 00001942 002 OF 002

coordinated approach to provide support to the gas sector policy
challenges. END COMMENT.

This cable is coordinated with Consulate Lagos.

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