By Seun Ibiyemi
The Midstream and Downstream Gas Infrastructure Fund (MDGIF) has denied allegations of under-remittance of gas flare penalties, saying discrepancies identified in the Auditor-General of the Federation’s 2023/2024 Annual Report on Non-Compliance and Internal Control Weaknesses arose from timing and reconciliation issues.
The Fund, a directorate of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said it does not collect gas flare penalties and should not be held responsible for any shortfall that may eventually be established in the collection and remittance process.
The clarification was contained in a statement issued on Tuesday by the NMDPRA and signed by its Director of Public Affairs, George Ene-Ita.
The statement followed the publication of the Auditor-General’s findings, which reportedly identified financial irregularities and revenue shortfalls amounting to approximately N94.4bn.
According to MDGIF, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is solely responsible for collecting gas flare penalties under the existing statutory framework.
It explained that the funds are subsequently remitted into the Federation Account before being disbursed to MDGIF’s dedicated account with the Central Bank of Nigeria through the Federation Account Allocation Committee (FAAC) at its monthly meetings.
“We wish to clarify that gas flare penalty remittances are collected solely by the Nigerian Upstream Petroleum Regulatory Commission, in line with its statutory responsibility,” the statement said.
“These collections are then remitted into the Federation Account, from which disbursements are made to MDGIF’s dedicated account with the Central Bank of Nigeria through the Federation Account Allocation Committee at its monthly meetings, a process that is well documented with records readily available.”
The Fund said the audit findings appeared to have focused on differences in remittance figures without adequately accounting for the movement of funds through the various agencies involved in the Federation Account process.
It maintained that the variances did not represent missing or unaccounted revenue.
“The variances flagged in gas flare penalty remittances reflect timing and reconciliation across the multi-agency Federation Account channel through which NUPRC collects and remits these funds, not unaccounted revenue,” it stated.
MDGIF disclosed that it had formally written to the Office of the Auditor-General of the Federation, submitting relevant FAAC records and requesting a review of the audit position.
It stressed that its role was limited to receiving statutory revenues rather than collecting gas flare penalties.
“It must also be stressed that, as MDGIF’s role is limited to receiving statutory revenues rather than collecting them, any shortfall that may ultimately be established falls within the remit of the collecting agencies, not the Fund,” the statement added.
The Fund said reconciliation of all revenues accruing to it remained ongoing and involved relevant regulatory agencies in the petroleum sector.
“Reconciliation of all monies accruing to MDGIF is a joint undertaking involving the relevant regulatory institutions within the sector, and this process remains ongoing to ensure that outstanding amounts are properly accounted for,” it said.
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MDGIF also defended its governance structure, saying its operations were guided by established investment and approval frameworks.
“MDGIF operates under a robust governance architecture anchored by its Investment Policy Statement and overseen by its Governing Council. All transactions are duly authorised in accordance with this framework,” the statement said.
The Fund added that it took its obligations under Section 52 of the Petroleum Industry Act 2021 seriously and welcomed scrutiny of the management of public resources dedicated to Nigeria’s gas infrastructure agenda.
The controversy highlights the complex movement of petroleum revenues through multiple regulatory and government institutions, with MDGIF insisting that the reconciliation of gas flare penalty collections must distinguish between the agencies responsible for collecting the funds and those designated to receive and deploy them for statutory purposes.
