NMDPRA rejects claims of unaccounted gas flare revenues

The Nigerian Midstream and Downstream Petroleum Regulatory Authority has told the Auditor-General of the Federation that the Nigerian Upstream Petroleum Regulatory Commission is solely responsible for collecting gas flare penalties, insisting that the Midstream and Downstream Gas Infrastructure Fund only receives its statutory allocation from the upstream regulator.

The NMDPRA, through the MDGIF, said the discrepancies flagged in the Auditor-General’s report were caused by timing and reconciliation issues in the Federation Account process and did not represent unaccounted revenue.

“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,” it was stated.

The clarification was contained in a statement signed by the Director, Public Affairs Department, NMDPRA, George Ene-Ita, on Tuesday.

It followed the Auditor-General’s findings on the MDGIF, which The PUNCH reported had uncovered about N94.4bn in alleged financial irregularities and revenue-related issues involving the fund.

The audit report had, among other issues, identified discrepancies in gas flare penalty revenues reported by the NUPRC and amounts subsequently accounted for by the MDGIF.

But the NMDPRA said the process involved several agencies, with the penalties collected by the NUPRC and paid into the Federation Account before allocations were made to the MDGIF.

“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 statement explained.

The authority specifically rejected the interpretation of the discrepancies as missing funds, saying, “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 Auditor-General had identified differences in the gas flare penalty figures for 2023 and 2024, with the disputed amounts forming a significant portion of the financial issues highlighted in the audit report.

But the MDGIF said it had formally written to the Office of the Auditor-General seeking a review of the findings and had provided supporting FAAC records.

“The fund has written formally to the Office of the Auditor-General of the Federation, with the supporting Federation Account Allocation Committee records, to request a review of this position,” it added.

It also stressed that the responsibility for collecting the penalties did not lie with the MDGIF. “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 regulator said.

It noted that reconciliation of the monies accruing to it was still ongoing among the relevant regulatory agencies, stressing, “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.”

The authority also defended its financial controls, saying its transactions were subject to its established governance structure.

“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.”

It added that it remained committed to its statutory obligations under the Petroleum Industry Act. It was stated that 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 Auditor-General’s report had also raised other concerns about the MDGIF, including statutory revenues, consultancy payments and the Fund’s audited financial statements. The PUNCH had reported that the audit put the total financial irregularities and revenue-related issues at about N94.4bn.

However, the NMDPRA’s latest statement focuses specifically on the gas flare penalty issue, maintaining that the disputed figures should be reconciled through the Federation Account process rather than treated as unaccounted revenue.