*Cable exposes US concerns on coup, Yar’Adua, Niger Delta
*Explains how Yar’Adua diverted funds
A CABLE recently released by Wikileaks paints a portrait of the extent to which powerful oil giant, Shell, was involved in the political schemes in Nigeria. The US ambassador routinely contacted Shell to discuss important political and economic developments in Nigeria.

In this cable, Shell executive, Ann Pickard, reveals that Umaru Yar’adua’s wife, Hajia Turai, his economic adviser, Tanimu Kurfi, and the former Managing Director of the Nigerian National Petroleum Corporation, NNPC, Engr. Abubakar L. Yar’Ádua, were influenced.by Shell.

The Ambassador asked what Shell’s thoughts were on any potential for a coup. Pickard answered that there was little intellectual capital to plan and execute a coup and Shell saw little potential for one. Pickard then went on to say that corruption in the oil sector was worsening by the day. The Ambassador asked for a few examples. Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some “very interesting” people lifting oil (People, she said that were not even in the industry).

As an example she said that oil buyers would pay Nigerian National Petroleum Corporation, NNPC, officials and some people in Yar’Adua government paid millions of dollars per tanker, to lift oil. The IOCs control the liquefied petroleum gas (LPG) cargos, so GON actors do not have the same opportunity for illicit gain. Pickard also said xxxxxxxxxxxxAttorney General Aondoakaa had told a visitor that he would sign a document only if the visitor paid $2 million immediately and another $18 million the next day.

Big licence review

Pickard reported that Shell, Exxon-Mobil and Chevron all have big license review disputes with the GON. Shell has taken its dispute to court and the court is supporting Shell’s position. According to her, Shell is stepping back for the moment, however, to see how the other two majors negotiation fair, but is not taking its case out of court yet. The IOCs are quite concerned about the “very flawed” new petroleum sector energy bill.

The bill is silent on what fiscal regimes would be applied. Shell says that the bill could reduce the corporation’s overall value in Nigeria. GON discussions around the bill have mentioned the possibility of moving to five-year licences and prohibiting exploring both oil and gas from the same source, which would contradict how oil and gas extraction works in practice. The bill is silent on joint ventures; it just states that NNPC will be incorporated. Pickard said the bill was “likely to sail through.”

The IOCs will be asking U.S., Dutch and U.K. COMs to convey points on the bill to GON policymakers. (Note: Pickard mentioned that the IOCs will not share company information directly; they will hire consultants, like McKinsey, to produce common themes so the messages from the IOCs to be shared with the relevant Ambassadors are clear and consistent. End note). Pickard lamented that the expected cycle of petroleum is at least five years for the first oil to flow, another 10 years of production to begin to break even. These numbers change when oil is $40 per barrel instead of $100 per barrel. Hence, a five year license would not be an incentive for investment and development.

The Ambassador said that the Mission was looking at performance measures for the economy, i.e. the linkage between the country’s electricity output and gross domestic product (GDP). The Ambassador shared that the Mission feels strongly that gas for feedstock is the key to Nigeria’s power production, which is only about 2,800 average megawatts for a country of 140 million people. Pickard agreed and added that the U.S. got it wrong on its domestic natural gas policies, which it took over 20 years to sort out.

So it is not surprising that Nigeria has it wrong at this point. She said there is not adequate infrastructure for gas. Gathering plants and pipelines to carry the product to the power plants still have to be financed and built. The Nigeria Independent Power Projects (NIPP) were located where there is no gas and no infrastructure. In addition, the international oil companies were coerced into building  a power plant each, something they have no expertise in, and they are scrambling to deliver gas to these plants.

Pickard agreed that the President’s health is a guessing game. She said that in her recent meetings with Yar’Auda he seems alert but drawn in the face and frail. She reported that a xxxxxxxxxxxx contact says that the President was not in danger of dying soon but has serious ailments from which he will never fully recover. Pickard shared that Berger provides transportation including planes for the President and has reportedly flown in doctors and technicians to attend the President (reftel).

She said, for instance, that xxxxxxxxxxxx confided that they flew the President from Germany to Saudi in September 2008. Additionally, the Berger contact thought the President would not return to the Villa offices, as they were moving the President’s personal things out of the Villa. (Note: What we think this means is that Yar’Adua is spending most of his time in the presidential residence and not in the Villa offices.

The Ambassador asked how comfortable Shell was with the new appointment of Dr. Rilwanu Lukman as Minister of Petroleum Resources, and the appointment of Mohammad Sanusi Barkindo as the new NNPC GMD. Pickard sees the nationalism card cooling with the removal of former NNPC GMD Yar’Adua, given that new Minister of Petroleum Lukman is more “pragmatic” and will hold sway over deputy Minister Ajumogobia.

(Note: Ajumogobia’s technical assistant told EconOff in a meeting on January 14, 2009 that the State Minister was focusing on Gas, since before the mass cabinet change he was State Minster of Petroleum, with a separate State Minster for Gas.) End Note. She said she was also okay with NNPC chief Barkindo. She has worked with Barkindo several times over the past few decades, especially when they were both working climate change.

She said Barkindo led Nigeria’s technical delegation to climate change negotiations that produced the United Nations Framework Convention on Climate Change (UNFCCC)and the Kyoto protocol to UNFCCC during while he served on its Bureau at various times. She indicated that although his undergraduate studies were in political science, he obtained his MBA from Southeastern University in Washington DC and did postgraduate work in petroleum economics and management at Oxford University. Although she also said terms like nationalistic and Chavez she however said that she thought he could be steered in the right direction on the petroleum sector.

Although Pickard clearly seems frustrated with the way things are going in the maritime security, oil sector legislation, and corruption which affects Shell’s bottom line, it was useful to hear that she has hopes for the new Petroleum Minister and NNPC chief. Septel on the Ambassador’s meeting with new Petroleum Minister Lukman will address many of these same issues.
xxxxxxxxxxxx suggested that while Yar’Adua served as governor of Katsina, a family member allegedly manipulated him into diverting millions of dollars of funds from the state treasury into private Yar’Adua family accounts. xxxxxxxxxxxx alleged that Yar’Adua used these stolen funds to construct a lavish private residence in Katsina and to finance family vacations to the Middle East and the UK (Ref A). Though xxxxxxxxxxxx acknowledged that Yar’Adua as former governor had built primary and secondary schools in Katsina, xxxxxxxxxxxx criticized Yar’Adua for failing to properly fund the training of teachers for those schools.

As a result, xxxxxxxxxxxxx said, unlike in the past, under Yar’Adua’s two terms as governor, Katsina students consistently failed to meet national standards in math and reading assessments. xxxxxxxxxxxx said that for Yar’Adua, “it was all about the spectacle of governing.” Even the roadways in Katsina, xxxxxxxxxxxx said, may have been impressive, particularly when compared to the deplorable road network in other parts of the North, however, xxxxxxxxxxxx alleged that while the roads had been built, the contract costs were egregiously inflated and the excess funds were siphoned. xxxxxxxxxxxx said some Katsina road contracts had been given to non-existent, “ghost” companies, which were secretly “owned” by Turai Yar’Adua.

COMMENT:xxxxxxxxxxxx allegations of Turai Yar’Adua’s contract_related corruption in Katsina also seem credible in light of similar claims previously reported by the Mission since she became the First Lady (see Ref A, for example).xxxxxxxxxxxx perspective may help shed light on President Yar’Adua. As reported (Ref C), we believe the President has two sides: one, for international consumption; and the other, which turns a blind eye to certain rule of law issues, particularly as it pertains to his wife.

Then-governor Yar’Adua’s unwillingness to engage in the necessary politicking to build a broad base of support in Katsina may have been relatively insignificant against the backdrop of insular Katsina state, or even northern regional, politics. However, as president of a diverse nation, with competing regional interests and powerful patronage networks, Yar’Adua’s continued political isolation (even within the North) may illustrate, to an extent, why even today Yar’Adua has not fully succeeded in truly stamping his authority on the PDP or the Presidency.

Certainly, Yar’Adua’s health remains a cause of concern for northern power brokers, especially in light of the possibility that Vice President Goodluck Jonathan would constitutionally be next in line for the presidency in the event of Yar’Adua’s demise, although we doubt the northern elite would allow this to transpire. Opposition presidential aspirant Muhammadu Buhari (All Nigeria People’s Party) told PolOff May 13 at his Kaduna home that given the North’s trepidation of power returning to theSouth (if, for instance, Yar’Adua cannot complete his term), Buhari feels vindicated in his insistence on challenging the President’s election. Buhari intimated that members of the northern political elite have begun visiting him to affirm their allegiance to him, and to support him as he continues to contest Yar’Adua’s election at the Supreme Court

Buhari noted that, in light of news of Yar’Adua’s troubling health, some northern power brokers now believe fresh polls (wherein Buhari emerges the victor) might be the best way of ensuring that the North retains the presidency.