By Jauhar Suleiman Salihu
The integrity of Nigeria’s gas transition agenda has come under fresh scrutiny after the 2024 report of the Auditor-General for the Federation accused the Midstream and Downstream Gas Infrastructure Fund, MDGIF, of failing to account for about N39 billion generated from the petroleum sector in 2023.
According to the audit findings, the unremitted funds represent statutory revenues accruable to the MDGIF from the 0.5 per cent levy on petroleum products and natural gas, as well as gas flare penalties. The MDGIF, a directorate of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, was created under Section 52 of the Petroleum Industry Act, 2021, to catalyse critical gas infrastructure, and its funding is tied to that levy and flare penalties. However, the Auditor-General’s report has painted a troubling picture of leakages in that pipeline.
Specifically, the report explained that the Fund disclosed it generated N39.89bn from statutory levy revenue, but only N13.34bn was remitted and accounted for, leading to an under-remittance of N26.54bn. Similarly, for gas flare penalties, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, reported actual total revenue of N140.54bn. After deduction of 4 per cent cost of collection, the amount due to MDGIF was N134.92bn, but only N122.44bn was remitted, leaving a gap of N12.47bn. Together, both bring the flagged shortfall to approximately N39bn, which the report said led to loss of government revenue and impairment of the MDGIF initiative.
Beyond that, this N39bn is part of a larger N94.4bn set of irregularities identified in the full report. These ranged from under-remittance of petroleum levies and gas flare penalties to questionable consultancy payments. The largest portion involved N51.09bn in alleged under-remittance of gas flare penalties in 2023 and 2024, while another N39.49bn was linked to statutory revenues from petroleum products. In addition, the audit flagged N3.52bn paid to a consultant for recovery of flare penalties, N261.85m for transaction advisory without sufficient evidence of execution, and N65.8m in contracts allegedly awarded without due process. It also noted that the Fund failed to submit its audited financial statements for three consecutive years.
MDGIF insists Shortfall is a Reconciliation Issue
In response, the NMDPRA has denied any diversion, insisting that MDGIF is not a collection agency. In a statement by its Director of Public Affairs, George Ene-Ita, the Authority clarified that gas flare penalties are collected solely by NUPRC and remitted into the Federation Account, from which disbursements are made to MDGIF’s dedicated account with the Central Bank of Nigeria through FAAC. Consequently, it argued that variances flagged reflect timing and reconciliation across the multi-agency channel, not missing funds.
In essence, the Fund stressed its role is limited to receiving, not collecting. On the 0.5 per cent levy, it offered a similar defence, stating: “The MDGIF has informed the Authority of the need to carry out reconciliation of the outstanding amount of 0.5% being owed by different petroleum marketers as against the debit notes earlier issued.” It promised to conclude reconciliations by Q3 2025 and report recoveries to the Auditor-General by October 2025, adding that it has formally written to the Auditor-General with supporting FAAC records to request a review.
This controversy comes at a critical time for Nigeria’s Decade of Gas agenda, as MDGIF is expected to be the financial backbone for pipelines, CNG stations, LPG infrastructure and flare commercialisation. As such, any opacity around its inflows undermines investor confidence and the goal of ending routine flaring.
At its core, the audit revives an old public finance problem: fragmented collection and weak reconciliation. With NUPRC collecting, Federation Account warehousing, and FAAC disbursing, the chain is long, creating room for accountability gaps. Therefore, two things must now happen transparently: petroleum marketers owing the 0.5 per cent levy must be named and debit notes enforced, and the full month-by-month reconciliation between NUPRC, NMDPRA, FAAC and CBN must be published.
Ultimately, the Auditor-General’s report is not a final indictment but a trigger for the National Assembly’s Public Accounts Committees. Until the promised reconciliation is verified, the N39bn question will continue to hang over the Fund, testing the government’s commitment to plug leakages in the midstream itself.