Nigeria's state petroleum firm has been labeled insolvent, raising new questions 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 Nigeria, a member of OPEC and the world's eighth largest oil exporter.
The junior finance minister, Remi Babalola, said on Tuesday that Nigerian National Petroleum Corporation (NNPC) was insolvent, with liabilities exceeding assets by 754 billion naira (Dh18.36bn). NNPC disputed the claim, saying that the government owes it more than US6bn (Dh22bn) in subsidies. It said in a statement: "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."
The controversy has led to inevitable questions about what role corruption has played in NNPC's affairs in a country long held back by graft. Gbenga Martins, an economist and oil industry expert, said: ""Economically, there is no basis for NNPC to go bankrupt. 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 per cent of export earnings and 80 per cent of government revenues. 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. Some observers said, however, that the situation is unlikely to change before next year's vote, with the government seeking to look tough on corruption and the NPCC digging in while under pressure over the continuing reform drive. 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 a day, grossly under perform because of corruption and poor maintenance. As a result, the country faces fuel and electricity shortages, with power outages a daily part of life. * AFP
