The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has rejected suggestions that gas flare penalty revenues meant for the Midstream and Downstream Gas Infrastructure Fund (MDGIF) are missing or unaccounted for, attributing the reported discrepancies to timing and reconciliation issues within the Federation Account process.

The clarification followed findings contained in the Office of the Auditor-General of the Federation’s 2023/2024 Annual Report on Non-Compliance and Internal Control Weaknesses in Ministries, Departments and Agencies, concerning MDGIF, a directorate of the NMDPRA.

In a statement signed by its Director of Public Affairs, George Ene-Ita, the Authority explained that gas flare penalties are collected solely by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in line with its statutory mandate.

The funds, it said, are thereafter remitted into the Federation Account, from which allocations are made to MDGIF’s dedicated account with the Central Bank of Nigeria through the Federation Account Allocation Committee (FAAC) at its monthly meetings.

NMDPRA said the process is properly documented, with records available to support the transactions.

It maintained that the variances identified in gas flare penalty remittances do not constitute unaccounted revenue, explaining that they reflect timing and reconciliation across the multi-agency Federation Account channel through which NUPRC collects and remits the funds.

According to the Authority, MDGIF has formally written to the Office of the Auditor-General of the Federation, submitting relevant FAAC records and requesting a review of the position contained in the report.

NMDPRA also drew a distinction between revenue collection and the Fund’s statutory responsibility, stressing that MDGIF is only responsible for receiving statutory revenues and has no mandate to collect gas flare penalties.

“Any shortfall that may ultimately be established falls within the remit of the collecting agencies, not the Fund,” the Authority stated.

It added that reconciliation of all monies accruing to MDGIF remained a joint undertaking involving the relevant regulatory institutions within the petroleum sector.

The reconciliation process, NMDPRA said, is ongoing to ensure that all outstanding amounts are properly identified and accounted for.

On the governance of MDGIF, the Authority said the Fund operates under a robust governance architecture anchored by its Investment Policy Statement and overseen by its Governing Council.

It further stated that all transactions are duly authorised in accordance with the approved governance framework.

NMDPRA reaffirmed its commitment to the provisions of Section 52 of the Petroleum Industry Act 2021, stressed that it welcomes scrutiny of the management of public resources committed to Nigeria’s gas infrastructure development agenda.

The Authority said the ongoing reconciliation and engagement with the Auditor-General’s office would help provide further clarity on the reported variances and ensure that all statutory revenues due to the Fund are properly accounted for.