Nigeria state oil firm NNPC insolvent, says minister

Abuja, 14 July-(ANA)-Nigeria's state oil firm, the Nigerian National Petroleum Corporation, NNPC,  is insolvent, unable to pay debts of $ 5bn (£ 3.3bn), a government minister has said.

Junior Finance Minister Remi Babalola said the NNPC had asked for help to cover its debts and fund its operations.

But the corporation denied the claim and said the government was not paying its own debts to the firm.

The company controls more than half of oil assets in Nigeria - one of the world's biggest exporters.

"NNPC is insolvent as current liabilities exceeded current assets by 754bn naira ($ 5bn; £ 3.3bn)," Mr Babalola said at a government finance meeting.

He said the NNPC owed about $ 3bn (£ 2bn) to Nigeria's Federation Account, which distributes oil money to varying levels of the country's government.

Oil accounts for about 85% of Nigeria's government revenues.

Subsidised petrol

The NNPC rejected Mr Babalola's claim and said it was able to meet its financial obligations.

"We cannot be classified as insolvent when we have healthy cash flow and we can pay for our crude and product import obligations," said NNPC spokesman Levi Ajuonuma.

He said the Nigerian government owed the company more than $ 7bn (£ 4.6bn) in subsidies "which if reimbursed would enable the NNPC to offset the... debt being owed the Federation Account Allocation Committee". (ANA)

FA/ANA/13 July 2010-------