Abdulrasheed Bawa, a former chairman of the Economic and Financial Crimes Commission (EFCC), has revealed that Nigeria suffered a staggering $450 million loss due to fraudulent activities tied to the Petroleum Support Fund (PSF) between 2006 and 2012.
In his recently released book titled The Shadow of Loot & Losses: Uncovering Nigeria’s Petroleum Subsidy Fraud, Bawa meticulously chronicles the corruption that plagued the subsidy regime during the period under review, as reported by The Cable.
Bawa, who led the EFCC from February 2021 to June 2023, played a central role in probing the subsidy fraud as part of the commission’s elite investigative team. According to him, several oil marketers were held accountable, with convictions secured and 80 percent of the misappropriated funds recovered.
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He further disclosed that, since the nation’s return to civilian rule in 1999, over N16.5 trillion has been allocated to petrol subsidies.
“Our investigations revealed that, as admitted by the oil marketing companies involved, fraud related to petroleum subsidies exceeded N68 billion, which translates to over $450 million in direct fraudulent activities. This fraud involved 59 out of the 141 companies that participated in the PSF scheme from 2006 to 2011. We also uncovered fraudulent claims amounting to N19.6 billion on issues related to traders (sellers), of which the oil marketing companies denied knowing anything about,” Bawa wrote.
He elaborated on the intricate methods employed by fraudsters, including document forgery and manipulation of shipping records to inflate subsidy claims.
“Our investigation further identified an attempted fraud of N9.4 billion wherein oil marketing companies forged documents to align with altered dates on the mother vessel bills of lading to secure higher subsidy payments. However, due to existing contingencies in the application of the guidelines, these altered bill of lading dates were ultimately not utilized.”
Bawa noted that no irregularities were found in the initial two years of the scheme. However, from 2008 onwards, substantial fraud emerged. By 2011—the year identified as the height of the corruption—N41.7 billion in fraudulent activities were uncovered.
“Interestingly, there were no recorded infractions in 2006 and 2007. However, by 2008, 2009, and 2010, we uncovered significant fraud totalling N11.5 billion, N4.88 billion, and N10.3 billion respectively. 2011 marked what I consider the peak period of petroleum subsidy fraud, during which we identified fraudulent activities amounting to N41.7 billion. In total, the fraudulent schemes accounted for approximately N68 billion, of which around 80% has been recovered. The unrecovered funds are associated with cases still pending in court or involve promoters who have since passed away.”
He lamented that the financial losses went beyond the documented fraud, with many indirect and unreported revenue drains further compounding the nation’s economic woes. These misappropriations, he said, deprived critical sectors of much-needed investment.
“These direct losses in revenue, alongside many additional undisclosed amounts and indirect revenue losses, could have been used to finance essential public services, infrastructural development, and social welfare initiatives. Sadly, the fraudulent drain on public funds has exacerbated fiscal deficit, resulting in budget cuts in critical sectors such as education, healthcare, and social welfare programs.”
According to Bawa, official records compiled in his book demonstrate that the country spent N16.5 trillion on fuel subsidies over 25 years, a sum he believes was grossly inflated due to fraudulent practices.
“Table 6.1 presents the financial reports of subsidy payments under different administrations since Nigeria’s return to democracy in 1999. Over the last 25 years of democratic governance, Nigeria has expended a staggering N16.5 trillion on subsidies.”
A considerable fraction of that expenditure, he stated, stemmed from falsified subsidy claims and outright embezzlement from public coffers. The EFCC’s findings, he said, indicate that the country’s decision to borrow in order to fund subsidy payments has resulted in a deeply unsustainable economic situation.
The illicit diversion of subsidised fuel to black markets and exports, he noted, triggered artificial scarcity within Nigeria, exacerbating inflation and placing additional stress on consumers and the economy.
Moreover, Bawa emphasized that systemic corruption in the subsidy system discouraged external investors, particularly in the downstream oil sector, from committing resources to the Nigerian market.
“Between 2010 and 2011, PPPRA permits became a lucrative asset in Nigeria. They were often referred to as a ‘gold mine’. The allure of quick profits led to rampant abuse by which certain companies received permits to import PMS registered despite their lack of the prerequisite experience in the oil industry,” Bawa wrote.
“Investigations revealed that many of the new participants, especially those registered from 2008 onward, were established under compromised conditions….Some of the companies were ‘briefcase’ companies, which issued import permits through political patronage rather than through genuine business credentials.”
He pointed to 2011 as a turning point, when subsidy payments ballooned to an unprecedented N2.10 trillion—largely as a result of widespread fraud and manipulation.
“The year 2011 marked a peak in subsidy payment regime, reaching a staggering N2.10 trillion. The dramatic increase was linked to extensive fraud and abuse within the subsidy system. However, due to the widespread investigations led by the EFCC and public scrutiny concerning the management of the PSF in 2012, subsidy payments dropped significantly to N1.35 trillion despite the adjustments in petrol prices from N65 to N97. This decline occurred regardless of participants consuming similar or unchanged levels of PMS, pointing to inconsistencies in reported quantities across the various stakeholders.”
He concluded by revealing that, in just seven years, the federal government spent approximately N5.755 trillion under the PSF scheme. A significant share of these payments went to the Nigerian National Petroleum Corporation (NNPC) and various Oil Marketing Companies (OMCs), reflecting the financial strain of the subsidy program.
“Within seven years of the introduction of the Petroleum Support Fund (PSF) scheme, Nigeria disbursed a staggering total of approximately N5.755 trillion in subsidies. The breakdown of the payments made to Nigerian National Petroleum Corporation (NNPC) and other Oil Marketing Companies (OMC) reflects the scale and impact of the subsidy regime on Nigerian economy during the period,” he claimed.
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