Babalola defends NNPC debt

Babalola defends NNPC debt

The Federation Account Allocation
Committee (FAAC) appears increasingly helpless over the N450 billion
indebtedness by the Nigerian National Petroleum Corporation (NNPC), as
Minister of State for Finance, Remi Babalola, turns defensive over the
corporation’s ability to meet its obligations.

More than six months after last
December’s ultimatum by FAAC for NNPC to pay up the debt, Mr. Babalola,
who is the FAAC Chairman, told NEXT last Tuesday at the end of the
Committee’s meeting for May in Abuja, that the issue has lingered
because the corporation is still bleeding.

“We should not forget that in the last
few months there have been a lot of challenges and issues with the
NNPC. The Group Managing Director that took FAAC through all the
corporation’s challenges and promised to come up with a repayment plan
was changed barely after a month. Another one came, that was also
changed for a new one.

“We also know that NNPC has some
challenges, including subsidies on petroleum products supplies that are
not being replenished, making it to be bleeding, and very difficult for
it to meet certain obligations. The issue is not about decision to pay
or not.

“The truth, as we know in the Federal
Ministry of Finance as at today, is that NNPC’s cash flow warrants that
we work with them till it is able to stand on its own as a business
entity. We need to be holistic about these issues,” he said.

Lingering debt debacle

After several months of ignoring
appeals for reconciliation of outstanding payments to the Federation
Account, FAAC had issued the ultimatum to the then Group Managing
Director of the corporation, Mohammed Barkindo, to appear without fail
before its meeting of last January with the repayment plan.

Rather than respond, the NNPC
management reciprocated with an invitation to FAAC members, made up of
officials of the Federal and 36 state governments as well as the
Federal Capital Territory (FCT), Abuja, for a “special two-day
workshop” on ‘Understanding the operations of the Oil and Gas Industry
in Nigeria.’

At the opening of the workshop held
late last January, Mr. Babalola told participants that the NNPC may not
be able to pay up its debts, as a result of its cash flow problems.

Emboldened by kid gloves handling of
the matter, NNPC’s Group General Manager (GGM), Finance, Ahmadu Sambo,
at the workshop, gave fresh conditions for the repayment of the debt,
saying NNPC’s capacity to repay was hinged on how soon it would get the
reimbursement of over N1.1trillion from the Federal Government for
subsidy expenses incurred for petroleum products supplies and
distribution since 2003.

Not soft on NNPC

Describing FAAC’s approach on the
issue as a display of “unusual maturity and understanding,” considering
NNPC’s peculiar operational environment, the Minister said FAAC decided
to issue another ultimatum to the NNPC management demanding the
repayment plan, though there was no guarantee that a positive response
would come.

On allegations that FAAC was soft on NNPC over the issue as a result of reported deal with its management, Mr. Babalola noted:

“I was the same person that forced the NNPC to agree that they are owing the Federation Account N450 billion.

“I was the same person that took top NNPC management to the
Presidency over the same indebtedness. So, how on earth would anyone
allege that the debt has not been paid because FAAC was soft on NNPC,
or that there appears to be some arrangement for the money not to be
paid? Certainly, this is not correct. One needs to understand the
operations of the NNPC. One cannot be producing a product that costs
N60 and selling at N40, and would not be bleeding. It does not make
sense.

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