Exclusive: Nigeria state oil firm gives government informal loans: audit By Joe Brock

Nigeria's government owes the state-
owned oil firm for improper, informal loans used
to cover a range of expenses, from a presidential
helicopter to maritime security, a report of a
partial audit will say.
The audit, prepared by an outside organization
given access to accounts of the Nigeria National
Petroleum Corp as part of a government effort to
improve transparency at the firm, raises doubts
over its independence.
Africa's biggest oil producer and key supplier to
the United States is pinning its future oil industry
hopes on turning the debt-ridden NNPC into an
independent profitable company emulating
Brazil's Petrobras or Malaysia's Petronas.
NNPC has a budget agreed by parliament. Other
revenue it collects from oil production is meant to
be passed to the government accounts, but
industry experts say powerful interests tap money
before it is sent through official channels.
According to sources involved in the external
audit, it will show outstanding debts owed to the
oil company by a number of ministries and state
agencies. The company paid for a $14 million
presidential helicopter, and is owed $106 million
by the state power firm and $124 million by a
maritime security agency.
State governors are threatening to take the
federal government to court over illegal tapping
of oil revenues that should be shared with local
government.
The finance ministry and NNPC declined to
comment on the debts and the presidency and oil
ministry did not respond to requests for reaction.
"We are aware of many of these debts, obviously
it isn't an ideal situation," an NNPC source told
Reuters on condition of anonymity.
State agencies in debt to NNPC should be funded
through the budget, so such loans add to
transparency concerns.
The NNPC needs its own funds to pay for joint
ventures with foreign oil companies, some of
which have lain dormant due to a lack of state
investment.
"It does highlight the extent to which NNPC has
been drawn into the more opaque areas of
government - and will give ammunition to those
critics who say it has operated at least partly as a
slush fund for government," Antony Goldman,
Nigeria oil expert at PM Consulting said.
"It points to the huge difficulties in making
independent a corporation with such a complex
web of assets and liabilities, at least some of
which appear not to have been contracted solely
on a commercial basis."
Numerous earlier reports and audits have
concluded that corruption has been rife within
NNPC. Last year, Transparency International and
Revenue Watch ranked NNPC as one of the least
transparent oil companies in the world.
A parliamentary report in May uncovered a $6.8
billion fraud involving a government gasoline
import subsidy, which is partly run by NNPC.
That report said NNPC was accountable to no one.
It said the company owed oil traders, including
privately-held Trafigura TRAFG.UL, $3.5 billion in
unpaid bills.
Nigeria risks its 2 million barrel per day oil
production declining in the next few years if it
fails to reduce political uncertainty, corruption
and criminality.
A long-awaited Petroleum Industry Bill (PIB), due
to go to parliament for debate within days, is
supposed to spin off some assets and replace the
NNPC with a new, independent and partially listed
National Oil Company (NOC). A copy of the PIB
seen by Reuters is thin on detail, however.
The draft PIB also states that the oil minister will
oversee all institutions within the industry, raising
question marks over how independent the NOC
would be.
Nigerian President Goodluck Jonathan replaced
the managing director of the NNPC and three
other senior directors last month in efforts to
improve transparency and accountability.
(Writing by Joe Brock; Editing by Peter Graff)