Austen Oniwon, NNPC group managing director, told lawmakers from the Senate on Wednesday in Abuja that some of the country's past leaders caused to be withdrawn the sum of Naira 1.5 trillion ($10 billion) from the NNPC treasury for various uses other than oil and gas projects, Punch newspaper reported.

Oniwon was speaking at the public hearing held by the Senate joint committees on upstream and downstream petroleum probing the finances of the NNPC over the past nine years.

NNPC is facing financial difficulties as shown by, among other things, the inability to pay for domestic crude when due and delays in settling bills for fuel imports, Oniwon was quoted saying.

"NNPC is insolvent as current liabilities exceeded current assets by Naira 754 billion as of December 2008 and so NNPC is incapable of repaying the Naira 450 billion owed to the Federation Account unless it is reimbursed the Naira 1.156 trillion from the Ministry of Finance," he added.

He was reported to have told the probe panel that a former president unilaterally directed NNPC to release $18 million for the establishment of a sugar company.

The company was also directed to release Naira 651 million to the Department of Petroleum Resources, which was not refunded.

Nigeria's junior finance minister Remi Babalola first said on July 13 that NNPC was bankrupt and had debts running into hundreds of billions of naira. But the Finance Minister Olusegun Aganga recanted 24 hours later, saying NNPC was a going concern and therefore, could not be insolvent. NNPC had said then that the government owed it Naira 1.156 trillion ($8 billion) in promised subsidies on fuel imports.

The corporation also manages Nigeria's joint venture operations with foreign oil firms namely Shell, ExxonMobil, Chevron, Total and Eni.

However, NNPC's cash-strapped position has always been cited as reason for many of the delays in the JV oil and gas projects.

--Staff, newsdesk@platts.com