Key Points
• MDGIF says all gas flare penalty revenues due to the Fund are properly accounted for.
• The Fund says variances identified by the Auditor General reflect timing and reconciliation issues, not missing revenue.
• MDGIF has asked the Auditor General to review its position using relevant FAAC records.
Main Story
The Midstream and Downstream Gas Infrastructure Fund (MDGIF) has denied claims that gas flare penalty revenues were under remitted, saying all funds due to it are properly accounted for.
Mr George Ene Ita, Director, Public Affairs Department, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), made the clarification in a statement on Tuesday in Abuja.
He said the issue arose from findings in the Office of the Auditor General of the Federation’s 2023/2024 Annual Report on Non Compliance and Internal Control Weaknesses.
Ene Ita explained that MDGIF does not collect gas flare penalties. The revenues are collected by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) under its statutory mandate and paid into the Federation Account.
Funds due to MDGIF are subsequently transferred from the Federation Account into the Fund’s dedicated account with the Central Bank of Nigeria through the Federation Account Allocation Committee (FAAC).
He said the process was documented and that differences identified in the records did not mean that revenue had gone unaccounted for.
“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,” he said.
Ene Ita said MDGIF had formally written to the Office of the Auditor General of the Federation and submitted relevant FAAC records in support of its position.
He stressed that the Fund’s statutory role was to receive revenues allocated to it and did not extend to collecting gas flare penalties.
As a result, he said any shortfall that may eventually be established in the collection or remittance process would fall under the responsibility of the relevant collecting agencies rather than MDGIF.
He added that reconciliation of revenues accruing to the Fund was being carried out jointly by the relevant petroleum sector regulatory institutions.
According to him, the process remains ongoing to ensure that any outstanding amounts are properly identified and accounted for.
Ene Ita also said MDGIF operated under a governance structure guided by its Investment Policy Statement and supervised by its Governing Council.
He said the Fund remained committed to meeting its obligations under Section 52 of the Petroleum Industry Act (PIA), 2021.
The Issues
The dispute centres on the accounting and remittance trail for gas flare penalty revenues, which involves several government institutions rather than MDGIF alone.
MDGIF says the Fund does not collect the penalties and only receives its statutory allocation after the revenues pass through the Federation Account and FAAC.
It therefore maintains that differences identified in the records should be resolved through reconciliation of the accounts and should not automatically be treated as missing revenue.
What’s Being Said
“The collections are remitted into the Federation Account, from where disbursements are made to MDGIF’s dedicated account with the Central Bank of Nigeria (CBN) through the Federation Account Allocation Committee (FAAC) at its monthly meetings.” – George Ene Ita
“This is a process that is well documented.” – George Ene Ita
“All transactions are duly authorised in accordance with this framework.” – George Ene Ita
What’s Next
MDGIF has asked the Office of the Auditor General of the Federation to review its position using relevant FAAC records.
The reconciliation of revenues accruing to the Fund is also continuing among the relevant petroleum sector institutions to establish and account for any outstanding amounts.
Bottom Line
MDGIF has rejected claims of under remittance of gas flare penalty revenues, saying the discrepancies identified in the audit report are related to timing and reconciliation across the Federation Account system. The Fund says the ongoing reconciliation will establish whether any outstanding amounts remain.
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