Last updated at 18:47 ET
Nigeria state oil firm NNPC insolvent, says minister
Nigeria is a crude oil producer and exporter, but must import refined fuel Nigeria's state oil firm is insolvent, unable to pay debts of $5bn (£3.3bn), a government minister has said.
Junior Finance Minister Remi Babalola said the Nigerian National Petroleum Corporation had asked for help to cover its debts and fund its operations.
But the NNPC denied the claim and said the government was not paying its own debts to the firm.
The company controls more than half of oil assets in Nigeria - one of the world's biggest exporters.
"NNPC is insolvent as current liabilities exceeded current assets by 754bn naira ($5bn; £3.3bn)," Mr Babalola said at a government finance meeting.
He said the NNPC owed about $3bn (£2bn) to Nigeria's Federation Account, which distributes oil money to varying levels of the country's government.
Oil accounts for about 85% of Nigeria's government revenues.
The NNPC rejected Mr Babalola's claim and said it was able to meet its financial obligations.
"We cannot be classified as insolvent when we have healthy cash flow and we can pay for our crude and product import obligations," said NNPC spokesman Levi Ajuonuma.
NIGERIA'S CHEAP PETROL
Continue reading the main story Price capped at 65 naira ($0.44; £0.29) a litre
Subsidy costs $4bn (£2.6bn) a year
He said the Nigerian government owed the company more than $7bn (£4.6bn) in subsidies "which if reimbursed would enable the NNPC to offset the... debt being owed the Federation Account Allocation Committee".
The NNPC is plagued by mismanagement and corruption, says the BBC's Caroline Duffield in Lagos.
Although Nigeria is a major crude oil producer, it must buy almost all the petroleum products it uses on the international market because its own refineries are insufficient and dilapidated.
The NNPC buys refined petrol at international prices and sells it on to local marketeers at a big discount because Nigerians see cheap petrol as their birthright, says our correspondent.
The cost of capping petrol prices at just 65 naira ($0.44; £0.29) a litre is reportedly at least $4bn (£2.6bn) a year.
Correspondents say the subsidy also fuels smuggling and corruption.
Previous attempts to increase petrol prices have led to massive strikes and a government U-turn.
In May, China agreed a $23bn (£15bn) deal to build four new oil refineries in Nigeria.
President Goodluck Jonathan has promised to tackle corruption in the oil industry. He has sacked some officials from the NNPC and ordered an audit of the firm's accounts.
There is also legislation currently before the parliament which would bring sweeping reforms to Nigeria's oil and gas industry.