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ATM Card Suspension: Banks Reject Naira for Visa Payment

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Recession bites
  • ATM Card Suspension: Banks Reject Naira for Visa Payment

Thousands of United Kingdom and Canadian visa applicants and intending travellers wanting to book hotels online were stranded on Monday as Deposit Money Banks stopped their naira debit cards from being used for dollar and other foreign currency-denominated transactions.

The DMBs had on Friday stopped their naira debit cards from dispensing dollars to customers via Automated Teller Machines in foreign countries, as well as disallowed the cards from being used for online and Point of Sale transactions.

The banks cited dollar scarcity and volatility in the foreign exchange market as reasons.

Guaranty Trust Bank, Standard Chartered Bank and Stanbic IBTC Bank have already stopped the withdrawal of foreign currencies from the ATMs by their customers who travel abroad and cut the value of their online and PoS transactions to $100 per month.

The development made the UK visa applicants wanting to pay the mandatory $118 for the six-month and $499 for the two-year visas through their naira debit cards to be stranded.

Payment for the UK visa is done online via the government-designated website.

Travelling agents and applicants said they could not complete the UK visa application procedures on Monday. They said payments with naira debit cards of Guaranty Trust Bank Plc, Ecobank Nigeria, United Bank for Africa Plc and other banks were declined.

It was further learnt that intending travellers and visa applicants wanting to make hotel booking online could not do so as their transactions via the naira debit cards were declined by the banks.

“This is terrible. I am finding it difficult to pay for my UK visa online. I have filled the form. I have got to the payment section and I was trying to pay online but the transaction was declined,” a visa applicant, who identified himself simply as John, told our correspondent at the UK visa application centre in Victoria Island, Lagos on Monday.

Travelling agents assisting the visa applicants to fill their forms said they found it difficult to make payment for UK and Canadian visas online using naira debit cards.

The Chief Executive Officer, Flying Partner, a Lagos-based travel agency, Mr. Kunle Oladele, said, “We could not make payment for the UK and Canadian visa applications online. The few payments we made were done through our partners in foreign countries, who used international debit cards issued by foreign banks.

“We called our partners in South Africa, UK and the United States to do so for us. It is very terrible. I am not sure we can continue like this. Canadian visa applicants will have to go to the country’s visa office now.”

Bank officials told our correspondent on Monday that they could not help the situation, citing the scarcity of dollars as the reason for the suspension of visa payment services.

“There is no dollar again in the country. There is nothing we can do about it,” an official of GTBank told our correspondent on the condition of anonymity.

Meanwhile, hundreds of customers besieged banking halls on Monday to apply for dollar debit cards, a day after the banks suspended naira debit cards from working overseas.

When our correspondent visited some bank branches, crowds of customers were seen filling forms to open domiciliary accounts and to obtain dollar debit cards.

Stanbic IBTC Bank and Standard Chartered Bank Nigeria had on Friday advised customers seeking to carry out transactions denominated in foreign currencies to apply for dollar or pound sterling debit and credit cards.

According to them, such cards will be linked to the customers’ domiciliary accounts.

In a notice to customers on Friday entitled: ‘Review of the international spending limit on your naira MasterCard’, GTBank stated, “We write to inform you of the monthly spending limit currently applicable when using your GTBank naira MasterCard for international payments via PoS and online.

“(The) previous monthly limit via PoS and online was $250; the new monthly limit via PoS and online is now $100. Kindly note that ATM cash withdrawal on your naira MasterCard is now only available in Nigeria.”

The development has also made students studying in the UK, US, Canada, Ukraine and other parts of the world to face more challenges getting their monthly stipends from their parents.

Most of the students had relied on ATM card withdrawals to get their monthly stipends from their parents before now.

Although other banks have yet to announce the suspension of ATM card services abroad, findings by our correspondent showed that many lenders had reduced drastically the amount that customers could withdraw via ATMs abroad.

The decision by some banks to suspend overseas ATM card services and online forex transactions came barely one week after the Central Bank of Nigeria, through the Bankers’ Committee, raised concerns about what it called the indiscriminate and suspicious manner in which some bank customers were spending dollars and other foreign currencies abroad through their naira debit cards.

Consequently, the regulator said it had concluded that bank customers who spent above the $50,000 annual forex limit it imposed would be barred from the forex market.

Dollar scarcity has been ravaging the economy after the price of crude oil, Nigeria’s main forex earner, crashed from $115 per barrel in June 2014 to around $51.4 per barrel currently.

The nation’s foreign exchange reserves have been depleting since then.

Last Wednesday, the country’s external reserves hit an 11-year low of $24.21bn, the latest data posted on the CBN website showed.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Energy

Egbin Decries N388B NBET Debt, Idle Capacity

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Egbin-Power-Plant - Investors King

Egbin Power Plc, the biggest power station in Nigeria, has said it is owed N388bn by the Nigerian Bulk Electricity Trading Plc for electricity generated and fed into the national grid.

The company disclosed this on Tuesday during an oversight visit by the Senate Committee on Privatisation, led by its Chairman, Senator Theodore Orji, to the power station, located in Ikorodu, Lagos.

The government-owned NBET buys electricity in bulk from generation companies through Power Purchase Agreements and sells it to the distribution companies, which then supply it to the consumers.

The Group Managing Director, Sahara Power Group, Mr. Kola Adesina, told the lawmakers that the total amount owed to Egbin by NBET included money for actual energy wheeled out, interest for late payments and available capacity payments.

Egbin is one of the operating entities of Sahara Power Group, which is an affiliate of Sahara Group. The plant has an installed capacity of 1,320MW consisting of six turbines of 220 megawatts each.

The company said from 2020 till date, the plant had been unable to utilize 175MW of its available capacity due to gas and transmission constraints.

Adesina said, “At the time when we took over this asset, we were generating averagely 400MW of electricity; today, we are averaging about 800MW. At a point in time, we went as high as 1,100MW. Invariably, this is an asset of strategic importance to Nigeria.

“The plant needs to be nurtured and maintained. If you don’t give this plant gas, there won’t be electricity. Gas is not within our control.

“Our availability is limited to the regularity of gas that we receive. The more irregular the gas supply, the less likely there will be electricity.”

He noted that if the power generated at the station was not evacuated by the Transmission Company of Nigeria, it would be useless.

Adesina said, “Unfortunately, as of today, technology has not allowed the power of this size to be stored; so, we can’t keep it anywhere.

“So, invariably, we will have to switch off the plant, and when we switch off the plant, we have to pay our workers irrespective of whether there is gas or transmission.

“Sadly, the plant is aging. So, this plant requires more nurturing and maintenance for it to remain readily available for Nigerians.

“Now, where you have exchange rate move from N157/$1 during acquisition in 2013 to N502-N505/$1 in 2021, and the revenue profile is not in any way commensurate to that significant change, then we have a very serious problem.”

He said at the meeting of the Association of Power Generation Companies on Monday, members raised concern about the debts owed to them.

He added, “All the owners were there, and the concern that was expressed was that this money that is being owed, when are we going to get paid?

“The longer it takes us to be paid, the more detrimental to the health and wellbeing our machines and more importantly, to our staff.”

Adesina lamented that the country’s power generation had been hovering around 4,000MW in recent years.

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Crude Oil

Oil Rises on U.S. Fuel Drawdowns Despite Surging Coronavirus Cases

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U.S. Crude Oil - Investors King

Oil prices climbed on Wednesday after industry data showed U.S. crude and product inventories fell more sharply than expected last week, reinforcing expectations that demand will outstrip supply growth even amid a surge in Covid-19 cases.

U.S. West Texas Intermediate (WTI) crude futures rose 48 cents, or 0.7%, to $72.13 a barrel, reversing Tuesday’s 0.4% decline.

Brent crude futures rose 34 cents, or 0.5%, to $74.82 a barrel, after shedding 2 cents on Tuesday in the first decline in six days.

Data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 4.7 million barrels for the week ended July 23, gasoline inventories dropped by 6.2 million barrels and distillate stocks were down 1.9 million barrels, according to two market sources, who spoke on condition of anonymity.

That compared with analysts’ expectations for a 2.9 million fall in crude stocks, following a surprise rise in crude inventories the previous week in what was the first increase since May.

Traders are awaiting data from the U.S. Energy Information Administration (EIA) on Wednesday to confirm the drop in stocks.

“Most energy traders were unfazed by last week’s build, so expectations should be high for the EIA crude oil inventory data to confirm inventories resumed their declining trend,” OANDA analyst Edward Moya said in a research note.

On gasoline stocks, analysts had expected a 900,000 barrel decline drop in the week to July 23.

“The U.S. is still in peak driving season and everyone is trying to make the most of this summer,” Moya said.

Fuel demand expectations are undented by soaring cases of the highly infectious delta variant of the coronavirus in the United States, where the seven-day average for new cases has risen to 57,126. That is about a quarter of the pandemic peak.

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Crude Oil

Oil Price Rises To $74.70 Despite Delta Variant

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Oil prices - Investors King

Oil price inched higher on Tuesday despite the fast spreading COVID-19 Delta variant. Brent crude oil, against which Nigerian oil is priced gained, $0.20 or 0.27 percent to $74.70 per barrel on Tuesday at 12:05 am Nigerian time.

Delta variant is spreading in China, the world’s largest importer of crude oil, forcing crude oil investors to start cutting down on their oil demand projections.

The Delta variant is still spreading and China has started to clamp down on teapots, so their import growth would not be that much,” said Avtar Sandu, a senior commodities manager at Singapore’s Phillips Futures, referring to independent refiners.

Strong U.S. demand and expectations of tight supplies have helped crude oil to recover from a 7 percent slump recorded last Monday to mark their first gains in two to three weeks last week.

Global oil markets are expected to remain in deficit despite a decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, to raise production through the rest of the year.

There is seemingly a battle within the energy complex between the prevailing supply deficit engineered by OPEC+ and the threat of the COVID-19 Delta variant in regions with low vaccination rates,” said StoneX analyst Kevin Solomon.

The slow take-up of vaccinations will continue to limit some upside in oil demand in those regions, and there will be intermittent spells in the recovery in the coming months.

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