NNPC’s insolvency crisis worry stakeholders
Speaking at a media workshop organised by Extractive 360, the experts noted that the profitability of the state oil firm and its subsidiaries show poor performance, considering the firm’s last audited financial records.
“This was primarily due to the high cost of operation, employee benefits, and other expenses recorded during the years. The performance of the three refineries shows ineffectiveness in the management of the refineries and therefore raises serious concerns about the continued operations of the refineries,” one of the experts, Nongomin Joshua, said.
The experts noted that the liquidity position of NNPC and subsidiaries was poor compared to other operators in the industry.
Like other speakers, he maintained that the entire solvency ratios calculated showed that NNPC as a group or corporation was “highly geared”, stressing that the corporation recorded negative equity which cast a doubt on the future prospect of the organisation.
Pointing to some regulatory gaps, the stakeholders said the overarching powers of the Ministry of Petroleum Resources over the industry as provided in the Petroleum Act (as amended in 2004) created a regulatory challenge.
They also noted that it is not proper for NNPC to have a dual mandate as a commercial player as well as a regulator.
According to them, the constitution was supposed to give the Auditor General for the Federation (AuGF) a clear or direct mandate to audit NNPC.
To ensure leeway, the experts canvassed for the privatisation of all the refineries, an amendment to the sector’s regulatory framework, empowerment of AuGF to audit the activities of NNPC.
They also called on the government to strengthen the roles of the finance ministry by amending the existing legal framework.
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