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NNPC Insolvency: We Are Not Party To Babalola's Remarks – FG

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ABUJA, July 14, (THEWILL) - The Federal Government today clarified its stand on the ongoing disagreement between the Ministry of Finance and the Nigerian National Petroleum Corporation (NNPC) over the N450 Billion owed the Federation Account stating that it was not party to remarks credited to Minister of State for Finance, Mr. Remi Babalola to the effect that the NNPC was broke.

Babalola reportedly said NNPC was indebted to the tune of N450 billion naira to the Federation Account and was in dire financial strains and could not pay immediately, but the corporation immediately debunked the claim, saying it has the capacity to meet its financial obligations to partners and stakeholders.

"NNPC is insolvent as current liabilities exceed current assets," adding that "NNPC is incapable of repaying the N450 billion naira owed Federation Account unless it is reimbursed the N1.156 trillion naira (in subsidies) it has requested from the Federal Ministry of Finance," Babalola said at the FAAC meeting on Tuesday.

In a quick reaction, General Manger Group Public Affairs of the Corporation 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. 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."

Ajuonuma said the Corporation was being owed N1.156 trillion naira by the Federal Government as a result of petroleum subsidies which if reimbursed would enable the NNPC to offset the N450 billion naira debt being owed the Federation Account Allocation Committee (FAAC).

Speaking to Journalists at the end of the meeting of the Executive Council of the Federation, Information and Communications Minister Dora Akunyili who read the Federal Government’s statement debunked the claim, maintaining that "NNPC, from the auditor’s account is a going concern and does not have solvency issue as a co-operation. Therefore categorically, NNPC is not insolvent".

Akunyili, in conjunction with the Finance Minister Olusegun Aganga and Babalola, added that "given the nature of NNPC, there are regular transactions between Federal Government and NNPC and as a result there are always outstanding balances between the cooperation and the Federal Government".

In absolving NNPC of insolvency Aganga said the transactions referred to by Babalola were only two out of the many outstanding balances involving the Federal Government and the NNPC, stressing that the development did not give a true picture of the financial state of the corporation.

Aganga said, "We have so many different transactions between the NNPC and the federal government, in some of the balances it maybe a daily balance and in another it may be a trade balance, you need to make all of these things up."

"What you saw yesterday was just balances arising from two types of transactions that we have made and that was the point they were trying to make yesterday (Tuesday), so it is incomplete and it doesn’t give you the complete picture, once reconciliation is done payment goes back and forth, between the two entities."

Aganga said further that "the payment to NNPC we make is done regularly but as you know NNPC is great concern and is involved in all the joint venture we have in the country, and is also involved with all international oil companies (IOCs), we still have all the wells and all other agencies related to the NNPC."

On the time set for the NNPC to offset the balances, the Finance Minister said, "if you are worried about NNPC that is a different matter, you are aware that there is a forensic audit that the President asked us to undertake and that is happening now and if you ask when it will be out I will say that it is roughly going to be about eight weeks."