MDGIF rejects Auditor-General’s N94.4bn audit query
September 8, 2026 6:24 pm
The Midstream and Downstream Gas Infrastructure Fund has denied allegations of under-remittance of gas flare penalties raised in the Office of the Auditor-General of the Federation’s 2023/2024 Annual Report on Non-Compliance and Internal Control Weaknesses.
The fund, a directorate of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, said the discrepancies identified by the Auditor-General did not represent missing or unaccounted revenue but arose from timing and reconciliation issues within the multi-agency Federation Account remittance process.
The clarification 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.
But in its statement, the fund stressed that it does not collect gas flare penalties and therefore should not be held responsible for any shortfall that may eventually be established in the collection and remittance process.
According to the statement, the Nigerian Upstream Petroleum Regulatory Commission is solely responsible for collecting gas flare penalties under the existing statutory framework.
It explained that the funds are subsequently remitted into the Federation Account before being disbursed to the 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 MDGIF said the audit findings appeared to have focused on differences in remittance figures without adequately accounting for the movement of funds through the various 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.
The Fund 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, the MDGIF is expected to support investment in critical midstream and downstream gas infrastructure as Nigeria pursues increased domestic gas utilisation, industrialisation and energy transition objectives.
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.
The 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 controversy over the audit findings highlights the complex movement of petroleum revenues through multiple regulatory and government institutions, with the MDGIF insisting that the ultimate reconciliation of gas flare penalty collections must distinguish between the agencies responsible for collecting the funds and those designated to receive and deploy them for statutory purposes.
Damilola Aina is a journalist at Punch Newspapers with over five years of experience covering energy, business, investment, infrastructure, and property sectors. He specializes in producing well-researched and insightful reports that inform readers and provide clarity on complex topics. Damilola’s work demonstrates practical newsroom experience, editorial insight, and a strong commitment to accurate and engaging journalism.
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