Obasanjo has been critical of the World Bank and IMF

The House also said it would breach an "open skies" agreement signed last year with the US.

The "open skies" deal was one the IFC's key complaints but it also blame the auction of Nigeria's international air traffic rights as a reason for withdrawing.

It added the decision to allow British Airways to increase the flights and to give Virgin Atlantic access to the London-Lagos route did not help make Nigeria Airways attractive to prospective investors.

The IFC has been active in Nigeria since 1964 and is the biggest source of private finance in Africa.

Nigerian economy

Since Nigeria returned to civilian rule in 1999, President Olusegun Obasanjo has mounted a vocal campaign for debt relief.

Past Nigerian governments have squandered most of the estimated $280bn the country has earned from oil in the past 30 years.

Nigeria and its creditors disagree over the scale of the country's debt which Nigeria puts at $28bn and the World Bank and IMF at $32.3bn.

Most of the debt burden was built up under periods of military rule.

On Friday the World Bank warned that it would not offer debt relief unless oil-rich Nigeria was economically restructured.

Debt relief

The world's sixth largest oil exporter, which produces more than two million barrels of crude oil per day, "is in an unusual situation", the World Bank's vice president for the Africa region, Callisto Madavo said.

The government has been offered debt relief in exchange for the privatisation of key state-owned enterprises including telephone company Nitel, the National Electric Power Authority (NEPA) and Nigeria Airways.

British telecoms giant Vodaphone blamed inconsistent government policies for the collapse of its alliance talks with Nitel in February.

Nigeria Airways began in 1958 as West Africa Airways Corporation and operated services to London with BOAC.

The fleet is currently made up of Airbus A310s, Boeing 707s and 737-200s and DC10-30s.