ABUJA (Reuters) - Nigeria's government said on Wednesday that its $340 million communications satellite was not lost in space, as reported by the local media, but that it was simply suffering from a flat battery.

The Nigerian Communication Satellite, or NIGCOMSAT-1, blasted off from a launch pad in China in May 2007 to great fanfare, with Nigeria hoping it would offer advanced telecoms, broadcasting and broadband multimedia services for 15 years.

Minister of state for Science and Technology Alhassan Zaku said engineers at ground stations in Abuja and China had noticed the satellite's solar-powered battery was not recharging and feared it could smash into other satellites if left unrepaired.

"After looking at the options we decided that the best thing to do was to park it, like you park a car," Zaku said.

"If it wasn't parked and it lost all its power there would be no energy to even move it ... and it would be like a loose cannon and would keep rolling about and hit other satellites in the orbit," he told reporters.

Nigerian newspapers had reported NIGCOMSAT-1 was missing from orbit.

The satellite was supposed to make Africa's most populous nation a technological hub, saving broadband users and phone users hundreds of millions of dollars a year and enabling Internet access to remote rural villages.

Critics say the project, estimated to have cost the government 40 billion naira, has done little to improve communications, with Internet connections notoriously unreliable and among the most expensive in the region.

Zaku said the satellite was insured and that it would be replaced if it could not be repaired. He said customers had been assured that television, radio and Internet services affected by the problem would be re-routed.

Nigerian Internet users have already been battling with service problems after damage to the South Atlantic Terminal III (SAT-3) underwater cable, the main gateway to the country for international calls and Internet connections.

Nigeria's formerly state-owned telecoms firm Nitel said last month it had invited foreign firms to help it fix the cable.