Abdulrasheed Bawa, former Chairman of the Economic and Financial Crimes Commission (EFCC), says Nigeria lost over $450 million to massive fraud under the Petroleum Support Fund (PSF) between 2006 and 2012.
In his new book titled The Shadow of Loot & Losses: Uncovering Nigeria’s Petroleum Subsidy Fraud, Bawa details how corruption crippled the subsidy regime. The Cable published excerpts from the book on Saturday. As a lead investigator on the EFCC’s special task force, Bawa had direct insight into the scheme’s inner workings.
How the Fraud Unfolded
Out of 141 companies involved in the PSF during that period, 59 submitted fraudulent claims. These companies inflated subsidy payments through forged shipping documents and altered delivery records, siphoning approximately ₦68 billion (over $450 million).
Bawa disclosed that 80% of the stolen funds have been recovered. The rest remains tied up in unresolved court cases or associated with deceased defendants. The years between 2008 and 2011 marked the height of the abuse, with subsidy-related fraud totalling ₦11.5 billion in 2008, ₦4.88 billion in 2009, ₦10.3 billion in 2010, and ₦41.7 billion in 2011.
Trillions Spent, Little Gained
Since Nigeria’s return to democracy in 1999, successive administrations have spent over ₦16.5 trillion on petrol subsidies. Bawa notes that a significant portion of this amount went to falsified claims and non-existent fuel imports.
Within just seven years of the PSF’s operation, the government paid out ₦5.76 trillion in subsidies. In 2011 alone, payments hit a record ₦2.1 trillion, largely due to widespread abuse and inflated import volumes.
Impact on the Economy
Bawa highlights that the fraudulent drain on public funds widened Nigeria’s fiscal deficit. These losses, he argued, could have funded education, healthcare, and essential infrastructure. Instead, the government resorted to borrowing to sustain subsidy payments.
Fuel intended for local consumption often ended up on the black market or was smuggled out of the country. This led to persistent shortages, artificial demand, and rising inflation. Investors, wary of the distorted market, stayed away from Nigeria’s downstream sector.
Political Influence and ‘Briefcase’ Importers
The former EFCC boss pointed to political interference as another enabler of the fraud. Many companies that received fuel import licenses lacked any real capacity to trade petroleum products.
Between 2010 and 2011, permits issued by the Petroleum Products Pricing Regulatory Agency (PPPRA) became a “goldmine,” according to Bawa. Several of the beneficiaries operated without offices or staff, relying solely on political connections to cash in on subsidy payouts.
Public Pushback and Government Reaction
In 2012, following widespread public protests and EFCC investigations, the federal government cut subsidy spending to ₦1.35 trillion. This reduction came despite an increase in pump prices from ₦65 to ₦97 per litre. Consumption levels remained steady, exposing inconsistencies in reported fuel import volumes.
Bawa concludes that the subsidy regime weakened Nigeria’s institutions, enriched a select few, and drained resources from vital sectors of the economy.
