CBN to sanction banks over Electricity Stabilisation Fund
The Central Bank of Nigeria (CBN) has said that it would sanction any of the Deposit Money Banks (DMBs) that contravenes the terms and conditions of the Nigerian Electricity Market Stabilisation Facility (NEMSF).
The apex bank gave the warning on Monday (September 5, 2016) in a circular signed by its Director, Financial Policy and Regulation, Mr. Kevin Amugo, it said that it would impose monetary sanctions as well as terminate the participating mandate of any bank that violates the terms and conditions of the CBN/NEMSF.
The Nigeria Electricity Market Stabilisation Fund (CBN-NEMSF) is targeted at settling outstanding payment obligations due to market participants under the IRP Debts as well as legacy gas debts of the PHCN generation companies owed to gas suppliers and the Nigeria Gas Company, which was transferred to the Nigeria Electricity Liability Company Ltd with the objective of putting the NESI on the route to economic viability and sustainability.
According to CBN the sanctions that may be imposed are not limited to those listed as it may impose additional sanctions, and in such form as it may deem fit, to include regulatory action against officials of defaulting banks.
The circular said: “penalties imposed as a result of sanctions may be directly offset against any fees payable to a Deposit Money Bank under the CBN-NEMSF.”
The apex bank in the sanctions grid, said the closure of a Transaction Account by a DMB without the prior written consent of the refinancer will attract a fine of N2 million for the first infraction and termination of its mandate at further infractions.
Also, the apex bank said any bank that opens additional bank accounts for a beneficiary distribution company, whether or not for the purpose of receiving payments, fines and fees for electricity consumed by its customers, without the prior written consent of the refinancer, “shall pay a penalty of N2 million on each account opened and shall be instructed by the refinancer to close the account and transfer all funds in the account into the Principal Collection Account (PCA) within 24hours.”
“If the infraction is not remedied after the expiration of the 24 hours, the bank will be liable to a penalty of N2 million per day for the number of days the account remains open,” the CBN said, adding that any further infraction will result in the “termination of the DMB’s participation as a Mandate Bank under the CBN-NEMSF.”
Already, CBN has disbursed N64 billion or 30 per cent of the facility to 18 participants. Five distribution companies received N41.06 billion; seven generating companies received N18.4 billion while six gas companies received N5.24 billion.
