[size=14pt]Nigeria oil firm insolvency raises corruption questions[/size]
By Aderogba Obisesan (AFP) – 4 hours ago

LAGOS — Nigeria's state petroleum firm has been labeled insolvent, raising new questions Wednesday over the oil-rich country's squandered resources and what role corruption played in the company's fate.

The firm's woes have also thrown a spotlight on its complex relationship with the government, which forces the company to keep petrol prices low but has simultaneously held back subsidy payments.

The controversy has played out against the backdrop of an approaching election season, with a presidential vote set for early next year in the OPEC member, the world's eighth largest oil exporter.

Junior finance minister Remi Babalola said on Tuesday that the Nigerian National Petroleum Corporation (NNPC) is insolvent, with liabilities exceeding assets by 754 billion naira (five billion dollars, 3.9 billion euros).

NNPC disputed the claim, saying the government owes it more than six billion dollars in subsidies.

On Wednesday, NNPC spokesman Levi Ajuonuma responded angrily to the minister's statement, saying that labeling the firm insolvent amounts to calling the country bankrupt, because of its reliance on the oil industry.

"Anybody saying NNPC is broke, you are indirectly telling the world that Nigeria is broke, don't do business with Nigeria," he said. "It is a very serious matter. NNPC is not broke. Nigeria is not broke."

Because of the poor state of Nigeria's refineries, the company has to import products from abroad and pay market price. It must then charge a fixed price for petrol, a situation that has created the problem, according to NNPC.

"When you buy high and you have to sell at a fixed price, there is always a difference, and that difference, for almost eight years now, has been building," said Ajuonuma.

The controversy has led to inevitable questions however about what role corruption has played in NNPC's affairs in a country long held back by graft.

"Economically, there is no basis for NNPC to go bankrupt," said Gbenga Martins, an economist and oil industry expert. "Corruption is the bane of NNPC, which has landed it in its current situation."

Cletus Nwogwugwu, an Abuja-based economist and financial consultant, agreed that the NNPC "because it is inefficient and swimming in corruption, does not have a good standing to say that it cannot pay its bills."

But there are also a range of other connected issues, with the government seeking to reform the petroleum industry, the source of an estimated 90 percent of export earnings and 80 percent of government revenues.[/b]

A reform bill is currently before the parliament, and the government wants to wean the NNPC off subsidies.

President Goodluck Jonathan, who took over in May after the death of his predecessor Umaru Yar'Adua, recently sacked two top officials of the NNPC and ordered an audit of its accounts.

He has also promised to cut down on corruption and reform the oil sector to make it efficient and profitable -- a daunting task given the NNPC's situation.

[b]Meanwhile, Nigeria's inability to capitalise on its oil wealth continues to cause frustration in the country of 150 million people -- Africa's most populous nation.

Its four refineries, with a total installed capacity of 445,000 barrels per day, grossly underperform due to corruption and poor maintenance.

As a result, the country faces fuel and electricity shortages, with power outages a daily part of life

http://www.google.com/hostednews/afp/article/ALeqM5jJaTC6YX9hJVIERvLM1gQrbckTXA

The effect of all this matters should be to unleash the EFCC on NNPC with the force of 7 hurricanes.
What we call fuel subsidy is just 90% FG money flowing directly and corruptly into private pockets, totally unaccounted for.

We find ourselves caught in a catch 22 situation, were subsidies are the only tangible benefit to the masses of a ridiculous system, in which Nigeria, one of the Worlds major oil producers, relies on imported fuel for a hundred percent of its needs.

Heads must roll.

[size=14pt]NNPC Bankruptcy Claim Rattles Presidency, Jonathan Orders Damage Control[/size]

Alarmed by the revelation by Minister of State for Finance, Mr. Remi Babalola that the nation’s state-run oil company, Nigerian National Petroleum Corporation (NNPC) was bankrupt, President Goodluck Jonathan has ordered his top ministers to “refute and repudiate” the report in an apparent damage control.

Nigerians and market watchers in the world were shocked yesterday that NNPC had gone backrupt and no longer solvent.

"NNPC (Nigerian National Petroleum Corporation) is insolvent as current liabilities exceeded current assets by 754 billion naira (5 billion dollars) as at December 31, 2008," Babalola said yesterday.

The minister said that in the same letter, NNPC said it was "incapable of repaying 450 billion naira (3 billion dollars) which it owed the Federation Account," referring to the account to which monies made by all government institutions, including customs and ports, are paid.

However, angered by public reaction to revealation, President Jonathan ordered the Minister of Finance Segun Aganga and Information and Communications Minister Dora Akunyili to “immediately refute the story.”

A Presiency source said that the junior minister may lose his job over the statement credited to him.

“The President is not happy and it seems like that statement to the media though may be true but was not cleared by the Presidency before it was made.” The source said.

Akunyili fired the first salvo this morning when she said, “does not have solvency issues.”

Her counterpart in the Finance Ministry, Olusegun Aganga followed later when he accused Babalola, his junior minister of not having the whole picture before making the statement yesterday that rattled the world.

He does not have "comprehensive picture."

“Yesterday’s statement has clearly rattled the Presidency and Babalola is fighting for his jon I can tell you.” The source told Thetimesofnigeria.com

http://www.thetimesofnigeria.com/TON/Article.aspx?id=2737

I hope it is not too late. In any event, heads must roll.

Tscheeeeeeeeeewwwww !    Job Pls!

http://businessdayonline.com/NG/index.php/news/76-hot-topic/18480-finally-nnpc-admits-we-are-broke

[size=16pt]Finally, NNPC admits: ‘We are broke’ [/size]

Austen Oniwon, group managing director, Nigerian National Petroleum Corporation (NNPC), finally admitted that the Corporation was broke, laying to rest the denials surrounding the dire situation of the state-owned oil firm’s financials which was first brought to the limelight in 2010 by ex-minister of state for finance, Remi Babalola. Oniwon told a gathering of top oil and gas executives at the on-going Oil and Gas Conference and Exhibition in Abuja that the NNPC balance sheet was in the red.

“We have to suspend increase in remuneration. The account of the organisation is in the negative; corporate failure is imminent unless urgent transformation is carried out” Oniwon told the stunned gathering.

Speaking in the same vein, Tim Okon of the Corporation’s corporate planning department said the level of losses recorded by the Corporation in the last few years had hindered its development.

Okon confirmed Oniwon’s earlier assertion that the NNPC’s cash flow is in the negative, and as a stand-alone enterprise, it is not commercially viable.