Thursday, 24 February 2011 Olusola Bello
•Corporate failure imminent
Austen Oniwon, group managing director, Nigerian National Petroleum Corporation (NNPC), finally admitted that the Corporation was broke, laying to rest the denials surrounding the dire situation of the state-owned oil firm’s financials which was first brought to the limelight in 2010 by ex-minister of state for finance, Remi Babalola. Oniwon told a gathering of top oil and gas executives at the on-going Oil and Gas Conference and Exhibition in Abuja that the NNPC balance sheet was in the red.
“We have to suspend increase in remuneration. The account of the organisation is in the negative; corporate failure is imminent unless urgent transformation is carried out” Oniwon told the stunned gathering.
Speaking in the same vein, Tim Okon of the Corporation’s corporate planning department said the level of losses recorded by the Corporation in the last few years had hindered its development.
Okon confirmed Oniwon’s earlier assertion that the NNPC’s cash flow is in the negative, and as a stand-alone enterprise, it is not commercially viable.
He further listed security as a major militating factor which, according to him, has contributed to the abysmal performance of the Corporation, warning that the risk of corporate failure is real for NNPC, except it transforms. He was concerned that if urgent steps were not taken, the Corporation might go the way of Nigeria Airways, NITEL and Nigerian Shipping Company.
Oniwon, who is confident that the Corporation can be transformed within 24 months, insisted that the transformation must be carried through if the Corporation is to be saved from failing in its responsibilities as a commercial enterprise. He observed that the transformation process would, however, not continue indefinitely.
Speaking on the viability of the Corporation before the transformation becomes fully operational, the GMD said once the NNPC can present quality assets to the lenders who would evaluate them, they would advance the loans it requires to start up on a clean slate.
Alex Ogedengbe, a former director of Port Harcourt Refinery and Petrochemical, observed that transformation was possible, provided managers of the project would remain focused and be given a free hand by government to do their work.
It would be recalled that Babalola had, in July 2010, raised the alarm on NNPC’s bad financial shape when he told a Federal Account Allocation Committee (FAAC) that the Corporation did not have enough money to fund its operations and was technically insolvent.
“NNPC is incapable of repaying the N450 billion owed to the Federation Account unless it is reimbursed the 1.156 trillion naira (in subsidies) it has requested from the Federal Ministry of Finance,” Babalola told FAAC at the time.
Levi Ajuonuma, NNPC spokesperson, had profusely defended the Corporation’s financials then.
“We cannot be classified as insolvent when we have a healthy cash flow and we can pay for our crude and product importation obligations” Ajuonuma swrote in his defense statement in 2010.
Oniwon’s latest revelation rubbishes Ajuonuma’s position and confirms the true picture of NNPC’s financial health hitherto hidden from the public.