By Chibuzor Alli
The Midstream and Downstream Gas Infrastructure Fund has rejected an N94.4bn audit query over alleged under-remittance of gas flare penalties, saying the discrepancies identified by the Auditor-General arose from timing and reconciliation issues rather than missing revenue.
The fund, a directorate of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, said it does not collect gas flare penalties and therefore should not be held responsible for any shortfall that may ultimately be established in their collection and remittance.
Its position was contained in a statement issued on Tuesday by the NMDPRA and signed by its Director of Public Affairs, George Ene-Ita.
PUNCH Online reported on Sunday that the Office of the Auditor-General for the Federation had uncovered financial irregularities and revenue shortfalls amounting to approximately N94.4bn in its 2023/2024 Annual Report on Non-Compliance and Internal Control Weaknesses.
According to MDGIF, the Nigerian Upstream Petroleum Regulatory Commission is solely responsible for collecting gas flare penalties under the existing statutory framework.
The fund explained that the penalties are subsequently paid into the Federation Account before disbursements are made to MDGIF through the Federation Account Allocation Committee.
The statement read, “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.
“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 between remittance figures without fully accounting for the movement of funds among the agencies involved in the Federation Account process.
“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,” the statement added.
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 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,” it stated.
The clarification comes amid increased scrutiny of public institutions following the publication of the Auditor-General’s annual reports, which routinely identify financial irregularities, unremitted revenues, weak internal controls and other instances of non-compliance across Ministries, Departments and Agencies.
Under Section 52 of the Petroleum Industry Act 2021, MDGIF is expected to support investment in critical midstream and downstream gas infrastructure as Nigeria seeks to increase domestic gas utilisation, industrialisation and energy transition.
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.
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 Fund takes its obligations under Section 52 of the Petroleum Industry Act 2021 seriously and welcomes the scrutiny that accompanies the management of public resources dedicated to Nigeria’s gas infrastructure agenda.”
The audit dispute highlights the complex flow of petroleum revenues through multiple regulatory and government institutions.
MDGIF maintained that any final reconciliation of gas flare penalty collections should distinguish between the agencies responsible for collecting the funds and those designated to receive and deploy them for statutory purposes.
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