Gas Flare Penalties Not Under-remitted, Says NMDPRA

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said gas flare penalty remittances into the Midstream and Downstream Gas Infrastructure Fund (MDGIF) have not been under-remitted, insisting that variances flagged by the Office of the Auditor-General of the Federation stem from timing and reconciliation issues within the Federation Account channel rather than a shortfall in remittance.

The  director, Public Affairs Department, NMDPRA, George Ene-Ita, in response to findings by the Office of the Auditor-General of the Federation contained in its 2023/2024 Annual Report on Non-Compliance and Internal Control Weaknesses in Ministries, Departments and Agencies, said the findings concerned the Midstream and Downstream Gas Infrastructure Fund (MDGIF), a directorate of the NMDPRA.

Ene-Ita clarified that gas flare penalty remittances are collected solely by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in line with its statutory responsibility, and not by MDGIF, which he said plays no role in the collection process.

He explained that the collections made by NUPRC are first remitted into the Federation Account, from where disbursements are subsequently made to MDGIF’s dedicated account with the Central Bank of Nigeria through the Federation Account Allocation Committee (FAAC) at its monthly meetings. He said this process is well documented, with records readily available for verification.

According to him, the variances flagged in the audit report reflect timing and reconciliation matters arising from the multi-agency Federation Account channel through which NUPRC collects and remits the funds, and should not be read as unaccounted revenue.

Ene-Ita disclosed that the Fund had written formally to the Office of the Auditor-General of the Federation, enclosing supporting FAAC records, to request a review of the audit position on the matter.

He stressed that since MDGIF’s role is limited to receiving statutory revenues rather than collecting them, any shortfall that may ultimately be established would fall within the remit of the collecting agencies, and not the Fund.

He added that reconciliation of all monies accruing to MDGIF is a joint undertaking involving the relevant regulatory institutions within the sector, noting that the process remains ongoing to ensure that all outstanding amounts are properly accounted for and reconciled across the agencies involved.

On governance, the statement said MDGIF operates under a robust governance architecture anchored by its Investment Policy Statement and overseen by its Governing Council, with all transactions duly authorised in accordance with this framework. This, Ene-Ita said, provides an additional layer of accountability over how the Fund’s resources are managed and deployed.

Ene-Ita said the Fund takes its obligations under Section 52 of the Petroleum Industry Act (PIA) 2021 seriously. The provision establishes the framework under which MDGIF operates as part of government efforts to finance gas infrastructure development and reduce gas flaring in the country’s oil and gas sector.

He said the Authority welcomes the scrutiny that accompanies the management of public resources dedicated to Nigeria’s gas infrastructure agenda, adding that MDGIF remains committed to transparency and to working with all relevant agencies to resolve any outstanding reconciliation issues.