NNPC Is Broke, Oniwon Tells Senate, Past Leaders Responsible For Insolvency
ABUJA, July 21, (THEWILL) - The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Austen Oniwon today confirmed that the corporation is broke and may not be meeting its obligations.
The assertion is a tacit confirmation of the earlier revelations by the Minister of State for Finance, Mr. Remi Babalola that the corporation is broke and as such insolvent, which was contradicted by the Federal Executive Council swiftly.
Oniwon told the Senate that the Corporation was indeed insolvent, and to buttress that, he submitted a letter he had forwarded to the Federation Account Allocation Committee (FAAC) affirming the insolvency.
The NNPC boss, who appeared before the Joint Senate Committees on Petroleum Upstream and Downstream on Wednesday, said the corporation’s travails were orchestrated by many of the Nigerian past leaders who took money from the NNPC without regards to due process.
Oniwon, who appeared before the Joint Committee alongside the Minister of State for Finance, Mr. Remi Babalola said that the Federal Government owes the corporation the sum of N1.5 trillion.
He further stated that though the corporation could pay the sum of N450 billion it owed the Federation Account, it could not do so because the government itself owed the NNPC N1.5 trillion.
He said that some former Nigerian leaders actually violated due process in managing the NNPC.
According to him some of the former leaders directed the NNPC to give funds to different agencies without the clearance of the National Assembly, adding that the various payments accumulated to N1.5 trillion, which the corporation is claiming.
The GMD also stated that one of the past leaders instructed the NNPC to release the sum of N651 million for the take off of the Department of Petroleum Resources (DPR) when it was established and that the funds were never refunded.
He disclosed further that NNPC was asked to release another $18 million for the use of an unnamed sugar company and that the funds were never refunded.
In the letter written to FAAC, and which was addressed to Babalola, the corporation stated that "NNPC is facing financial difficulties evidenced by amongst others, the inability to pay for domestic crude as at when due and delays in settling bills for fuel imports; the financial difficulties essentially stem from disequilibrium between costs and cash inflow streams; that the corporation is owed substantial amounts as un-reimbursed subsidy on petroleum products.
"NNPC spends increasing sums of money in repairing/replacing vandalized assets and is suffering from products loses arising there from; the cost of holding strategic reserve of petroleum products on behalf of the Federal Government including demurrage are borne by NNPC.
"NNPC is insolvent as current liabilities exceeded current assets by N754 billion as of December 2008 and so; NNPC is incapable of repaying the N450 billion owed to the Federation Account unless it is reimbursed the N1.156 trillion from the Ministry of Finance."
A copy of the letter was submitted to Senator Lee Maeba who headed the Joint Committee. The disclosure shocked the Senators who asked the corporation to present its annual accounts since 1999.
The Minister of State for Finance, Mr. Aderemi Babalola had earlier told the Senators that the NNPC had first deducted the sum of N85 billion from the Federation Account, with a promise to pay back the following month.
He said that instead of refunding the said sum, the corporation went ahead to withhold more funds.
He said, "At that time, we all believed that the cash flow problems would only last for a short time."
The Minister denied knowledge of Federal Government’s indebtedness to the NNPC to the tune of N1.5 trillion, adding that the Federal Ministry of Finance always released funds meant for payment of petroleum subsidy.