Date Published: 07/14/10

We are not broke says NNPC 

The Nigerian National Petroleum Company (NNPC), on Wednesday, denied media reports that it is insolvent.

According to the NNPC, it has enough funds to finance its petroleum products imports and purchase crude.

The oil giant was reacting to the Minister of State for Finance, Remi Babalola's statements that NNPC was "insolvent" because it owed N450Billion to the federal government.

Mr. Babalola, early this year, disclosed that the company was broke, as the poor state of its finances could not allow for the payment of the outstanding N450billion debt to the Federation Account.

Despite several ultimatums to its management since last year demanding the debt repayment schedule, the Federation Accounts Allocation Committee (FAAC), at its meeting last month, resolved to send a reminder, after the minister warned journalists that a positive response should not be expected, because of the corporation's dismal cash flow situation.

But the corporation's spokesman, Dr Levi Ajuonuma said "We cannot be classified as insolvent when we have a healthy cash flow and we can pay for our crude and product importation obligations,"

Adding however that "While it is true that the national indebtedness to the NNPC is putting pressure on our operations, nonetheless we are able to meet all our obligations. We therefore cannot be said to be insolvent." NNPC's financial position has been put under pressure partly because of delays in funding from the federal government, related to its supply of refined products such as gasoline and diesel to the domestic market."

According to the company, the federal government owed it N1.156 trillion in petroleum subsidies for these activities. The company imports products at international prices and also buys domestic crude for the country's Port Harcourt, Warri and Kaduna refineries at international prices. But these products are sold domestically at heavily subsidised prices.