NNPC is broke - GMD raises alarm •Says we can’t pay FAAC’s N450bn debt until, 




THE Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr Segun Oniwon, has disclosed that  the corporation will not be able to pay N450 billion owed the Federation Account  Allocation  Committee (FAAC) until the reimbursement of N1.156 trillion on fuel subsidies being owed by the Federal Ministry of Finance.

The NNPC, which oversees the country's vast oil industry, is locked in a standoff with the government, saying it is owed more than 1 trillion naira in subsidies.

However, the FAAC has resolved to report the NNPC to the presidency over the N450billion debt.

Mr Oniwon, in a letter addressed to the FAAC on Monday, July 12, 2010, through the Minister of State for Finance, Mr Remi Babalola, regretted the inability of the NNPC to pay the debt.

According to the letter, the NNPC GMD said the corporation was insolvent, as its  current liabilities exceeded current assets by N754 billion as of December 31, 2008.

Apart from this, the NNPC attributed its inability to pay up to the fact that it was facing a lot of difficulties evidenced, among others, by its inability to pay for the domestic crude promptly and the delay in settling bills for fuel imports.

“NNPC is incapable of repaying the N450 billion owed to the Federation Account unless it is reimbursed the 1.156 trillion naira (in subsidies) it has requested from the federal ministry of finance,” he said.

The NNPC, which blamed its financial difficulties on disequilibrium between costs and cash inflow streams, said the amount was expended on fuel subsidy which was yet to be reimbursed by the  Federal Ministry of Finance. Other reasons adduced were the fact that it spent increasing sum of money in repairing/ replacing vandalised assets while it also bore the cost of demurrage of holding strategic reserves on behalf of the Federal Government.

Reacting to the issue, the chairman of FAAC and the Minister of State for Finance, Mr Babalola, said the government was not owing the corporation any money.

On the decision reached by FAAC to get NNPC to pay the money, Mr Babalola said the committee had resolved to drag the NNPC to the Presidency.

It will be recalled that the issue of the alleged N450billion debt owed the Federation Account by the NNPC has been generating crisis for over 12 months now.

All the former GMDs of NNPC summoned by the committee to extract repayment plans from the corporation could not bring  forward any plan , alleging the insolvency of the corporation.

Meanwhile the FAAC shared the sum of N413.277 billion, N361.250billion statutory allocation and N52.027billion Value Added Tax, (VAT) among the three tiers of government for June.

Out of the N361,250 billion statutory allocation, the Federal Government received N171.678 billion, states got N87.078 billion while the 774 local governments received N87.078 billion.

The oil producing states also shared the 13 per cent derivation fund of N36.361billion.

In the case of VAT, the Federal Government received N7.804billion; states got N26.014billion, while the local governments received N18.209 billion.

so NNPC can be broke, wonderful

Why is anybody surprised. I hope Adams Oshiomhole, the NLC and all those pro subsidy protesters will proffer a solution out of this.

They are the only people who did not see this coming.

@ Becomerich, The title should read NNPC is broke, not Nigeria is broke. It's a little bit misleading.