NMDPRA rejects Auditor-General’s N94.4bn MDGIF irregularity claim, says flare penalties flow via FAAC
Nigerian Midstream and Downstream Petroleum Regulatory Authority NMDPRA
Abdullateef Fowewe
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has pushed back against findings in the Office of the Auditor-General of the Federation’s 2023/2024 report that flagged N94.4 billion in alleged irregularities around the Midstream and Downstream Gas Infrastructure Fund (MDGIF), including about N51 billion in purportedly under-remitted gas flare penalties.
In a statement issued on Tuesday and signed by George Ene-Ita, Director, Public Affairs Department, NMDPRA said the variances stem from timing and reconciliation issues across the Federation Account system, not from unaccounted revenue.
The Auditor-General’s 2023/2024 Annual Report on “Non-Compliance and Internal Control Weaknesses in Ministries, Departments and Agencies” highlighted irregularities totalling N94.4 billion in MDGIF, with specific concern on gas flare penalty remittances said to be short by roughly N51 billion.
NMDPRA clarified that gas flare penalties are collected solely by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), not by MDGIF.
According to the authority, these collections are first remitted into the Federation Account, and only afterwards disbursed to MDGIF’s dedicated account at the Central Bank of Nigeria through monthly Federation Account Allocation Committee (FAAC) allocations.
“We wish to clarify that gas flare penalty remittances are collected solely by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), 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 (FAAC) at its monthly meetings, a process that is well documented with records readily available,” it added.
On the discrepancies, NMDPRA stated, “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 Fund says it has formally written to the Auditor-General’s office, attaching FAAC records, to request a review of the findings.
NMDPRA also stressed that MDGIF’s role is limited to receiving statutory revenues under Section 52 of the Petroleum Industry Act 2021, implying that any established shortfall would fall within the remit of the collecting agencies rather than the Fund.
“The Fund has written formally to the Office of the Auditor-General of the Federation, with the supporting Federation Account Allocation Committee (FAAC) records, to request a review of this position,” the statement read.
“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 said.
NMDPRA further described MDGIF as operating under a “robust governance architecture” anchored by an Investment Policy Statement and overseen by its Governing Council, with all transactions duly authorised.
“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 authority stated.
The statement concluded that reconciliation of monies accruing to MDGIF is a joint, ongoing effort among sector regulators to ensure outstanding amounts are properly accounted for.
