Minister: Nigeria’s ‘insolvent’ state oil company needs $6.6B to remain in operation

Nigeria: ‘Insolvent’ state oil company needs $6.6B

ABUJA, Nigeria — Nigeria’s state-run oil company is “insolvent” and needs $6.6 billion to cover its debts and fund future oil exploration in the West African nation, a government minister said Tuesday.

Minister of State for Finance Remi Babalola said the Nigerian National Petroleum Corp. asked for the funding after acknowledging its costs far outpaced its earnings. The corporation owes $3 billion alone to Nigeria’s federation account, which distributes oil money to federal, state and local governments, Babalola said.

The corporation “is insolvent as current liabilities exceeded assets,” the minister said during a government finance meeting.

The state-run oil company later denied the claim, though foreign firms in the country have long grumbled about its financial failings.

“We cannot be classified as insolvent when we have a healthy cash flow and we can pay for our crude and product importation obligations,” company spokesman Levi Ajuonuma said in a statement. “While it is true that the national indebtedness to the (company) is putting pressure on our operations, nonetheless we are able to meet all our obligations. We therefore cannot be said to be insolvent.”

Oil money provides about 80 percent of Nigeria’s government funding, which trickles down to states that have budgets greater than those of surrounding nations. But the corruption that pervades the nation often sees that money go into political leaders’ pockets rather than toward government services.

Despite its oil wealth, Nigeria must import roughly 85 percent of the refined fuel used by its population of 150 million people. That’s even though Africa’s most populous nation remains one of the top crude oil suppliers to the United States.

The Nigerian National Petroleum Corp. partners with foreign oil firms like Chevron Corp., Eni SpA, Exxon Mobil Corp., Total SA and Royal Dutch Shell PLC in exploration of its oil-rich Niger Delta. The cash shortage calls into question what funds it can put toward new ventures with foreign firms.

Such ventures include the exploration of the Chad Basin, the large, shallow lake that forms Nigeria’s northwestern border. On Tuesday, President Goodluck Jonathan said his government remained committed to exploring the area for possible oil deposits.