Nigeria scraps state oil company

Umaru Yar'Adua has brought in many reforms since being elected

Nigerian President Umaru Yar'Adua is to scrap the state-owned oil corporation and restructure the industry.

A national energy council will instead be established to oversee the notoriously corrupt oil sector.

The council, headed by the president, has six months to create five new organisations out of the Nigerian National Petroleum Corporation (NNPC).

Nigeria is the world's eighth-largest exporter of crude oil but relies on imports for its fuel needs.

There are often fuel scarcities and the subsidised price of fuel is regularly flouted.

The country loses millions of dollars of oil through illegal sell-offs, and reform of the oil sector is one of the newly-elected government's key aims.

Conflicting roles

The BBC's correspondent in Lagos, Alex Last, describes the NNPC as a behemoth of an organisation.

It produces crude oil in partnership with foreign oil companies, but also imports fuel and acts as a regulator and administrator of the oil sector.

With so many conflicting roles, the NNPC became synonymous with massive mismanagement and corruption, our correspondent says.

Unions and opposition parties have criticised the NNPC for a lack of transparency over imports and exports worth billions of dollars each year.

The new reforms were recommended by a government report seven years ago but never implemented.

However, there is some scepticism and it will take time before it is clear whether the reforms will bring real change or whether they turn out to be simply cosmetic, our correspondent says.