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CBN Imposes N2m Penalty on Banks that Flout Electricity Stabilisation Fund Terms

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The Central Bank of Nigeria has threatened to sanction any of the participating deposit money banks that contravenes the terms and conditions of the Nigerian Electricity Market Stabilisation Facility (NEMSF).

The apex bank in a circular signed by the director, Financial Policy and Regulation, Kevin Amugo, and issued yesterday, said 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 CBN Nigeria Electricity Market Stabilisation Fund (CBN-NEMSF) is aimed 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.

The CBN pointed out that 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.

It noted further that any “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.”

Source: Leadership

 

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