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Card Suspension: Banks Record Increase in Domiciliary Account Requests

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  • Banks Record Increase in Domiciliary Account Requests

In the last three weeks, Deposit Money Banks have recorded an unprecedented surge in new domiciliary account holders, it has been learnt.

Top bank executives told our correspondent that following the suspension of foreign currencies’ withdrawals via Automated Teller Machines abroad using naira debit cards, the DMBs had recorded a sharp increase in the number of customers coming forward to open domiciliary accounts.

The banks had about three weeks ago stopped their customers from using naira debit cards to withdraw foreign currencies via the ATMs in foreign countries, especially European nations, the United States and Canada.

While majority of them also stopped online transactions dominated in foreign currencies and usage of the cards on Point of Sale terminals overseas, a few limited the PoS and online transactions to just $100 per customer in a month.

The decision by the banks followed the acute dollar shortage ravaging the economy, a situation that has made it difficult for Nigerian lenders to settle their counterparts abroad transactions arising from use of the ATMs and PoS machines abroad, as well as online transactions that are denominated in foreign currencies.

Following this development, top bankers told our correspondent that the rate at which the DMBs were recording requests for new domiciliary account openings was alarming.

In order to be able to carry out transactions in foreign currencies, they said many bank customers were now opening domiciliary accounts, which were also being accompanied with applications for dollar debit cards.

“It has been alarming in the last two to three weeks; there are days we record over 200 fresh applications for domiciliary account opening and dollar debit cards,” a top official of a tier-1 bank told our correspondent on condition of anonymity.

Aside from new customers applying to open domiciliary accounts and get dollar debit cards, bankers told our correspondent that they had recorded a sharp increase in the number of existing domiciliary account holders who were now applying for dollar debit cards to enable them to carry out transactions denominated in foreign currencies.

The DMBs had on October 14 announced the suspension of the use of their naira debit and credit cards in foreign countries, citing the acute dollar scarcity in Nigeria as the reason.

Stanbic IBTC Bank, Standard Chartered Bank Nigeria and Guaranty Trust Bank, while making the announcement, advised their customers to apply for dollar or pound sterling cards to enable them to do foreign exchange denominated transactions.

The decision by the banks has made thousands of United Kingdom and Canadian visa applicants and intending travellers wanting to book hotels online to be stranded.

Many of them have had to rely on travel agents, who use their partners abroad, to make payment for visa fees and hotel bookings.

Reacting to the development, the Chairman, Committee of e-Banking Industry Heads, the umbrella body for heads of electronic banking and payment cards in all the commercial banks in Nigeria, Mr. Dele Adeyinka, said until the dollar situation in the country improved, the banks would find it difficult to increase the limit for online and the PoS transactions, or lift the ban on the ATM withdrawal abroad.

He said, “For cards, we also considered that if we allow our customers to continue to go outside the country to use these cards, it will naturally get to a state that will further reduce our FX position as a country. This is because those other countries will need to be settled and they will not be settled in our national currency; they will be settled in foreign currencies (dollars or pounds).

“Of course, if anything is going to affect our country, it is in our interest as a country to put it on hold. We are not stopping it outright, we are only saying let us put a limit to the number of what our consumers can use for transactions outside the country.

“So, it is a temporary restrictive measure. It is hurting not just the consumers, it is hurting the practitioners, all of us; but it is a temporary pain we all have to bear now in the interest of our nation. Once we clear this hurdle and have enough FX reserves to be able to settle our bills, the cards will continue to work.”

The former Chairman, CeBIH, Mr. Tunde Kuponiyi, who is also the Group Head, Cards and e-Banking, Ecobank Nigeria, said most banks were no longer funding naira debit cards due to the scarcity of dollars.

As a result, he said most customers having obligations to settle in foreign exchange were applying for dollar debit cards.

According to industry experts, the development will lead to a marginal increase in the number of payment cards (debit and credit cards) in circulation in Nigeria.

Currently, industry data indicate that there are about 40 million payment cards in circulation in the country.

Unconfirmed banking sources said international payment card technology companies operating in the country, Visa Incorporated and MasterCard Incorporated, might record a sharp decline in their revenue from Nigeria following the naira payment card crisis.

It was learnt that the drop in the payment card usage abroad by Nigerian bank customers would have negative impact on the companies’ revenue.

Meanwhile, it was learnt that some Nigerians who travelled overseas without obtaining dollar debit cards had challenges making payments.

Findings by our correspondent revealed that the travellers were calling their banks from overseas, asking to know why they could not make payments with their cards via the Point of Sale terminals.

For some banks, which only limited their online and the PoS transactions, it was gathered that customers were calling from overseas to query why they could not make transactions above $100.

Many of them, it was learnt, were disappointed to be told that they had exceeded the $100 monthly limit permitted by the banks.

The ban and limit imposed on the usage of the payment cards overseas by Nigerian banks, experts said, would continue to dominate the banking space for the next few months.

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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Crude Oil

Petrol Subsidy Likely to Gulp N2T This Year –Rainoil GMD

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Nigeria may end up spending N2 trillion on petrol subsidy this year if the current situation persists, the Group Managing Director, Rainoil Limited, Dr Gabriel Ogbechie, has said.

Ogbechie said this on Sunday at the Nigeria History Series of the Centre for Values in Leadership, themed ‘Indigenous participation in the downstream oil and gas sector’ moderated by Prof. Pat Utomi.

While lamenting the lack of deregulation in the downstream sector, he said the government was spending about N8m daily on petrol subsidy.

He described the sector as highly regulated, saying, “I wonder if there is any other sector of the economy that is as regulated as the downstream.”

He said, “The biggest elephant in the room today as far as the downstream is concerned is the failure, so to speak, of the government to deregulate the downstream – fixing the price at which petroleum products are sold, I believe, is very seriously harmful to this economy.”

According to him, the landing cost of the petrol imported into the country is about N300 per litre, based on the current naira-dollar exchange rate.

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Crude Oil

Sirius Petroleum and Baker Hughes Collaborate on OML 65 Drilling in Nigeria

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Sirius Petroleum, the Africa-focused oil and gas production and development company, has signed a memorandum of understanding with Baker Hughes. The MoU names Baker Hughes as the approved service provider for Phase 1 of the Approved Work Program (AWP) of the OML 65 permit, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related services at a mutually agreed upon pricing structure to deliver the initial nine-well program.

Sirius has signed various legal agreements with COPDC, a Nigerian joint venture, to implement this program. COPDC has signed a Financial and Technical Services Agreement (FTSA) with the Nigerian Petroleum Development Company (NPDC) for the development and production of petroleum reserves and resources on OML 65. The FTSA includes an AWP which provides for development in three phases of the block. and Sirius has entered into an agreement with the joint venture to provide financing and technical services for the execution of the PTA.

The joint venture will initially focus on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 Mbbl, as certified by Gaffney Cline and Associates (GCA) in a CPR dated June 2021.

Commenting, Toks Azeez, Sales & Commercial Executive of Baker Hughes, said: “We are extremely happy to have been selected for this project with Sirius and their JV partners. This project represents an important step towards providing our world-class integrated well-service solutions in one of the most prolific fields in the Niger Delta. Baker Hughes’ technological efficiency and execution excellence will help Sirius improve its profitability and competitiveness in the energy market.”

Bobo Kuti, CEO of Sirius, commented: “We are delighted to have secured the services of one of the world’s leading energy technology companies to work with our joint venture team to deliver the approved work program on the block. OML 65. We look forward to building a long and mutually beneficial partnership with Baker Hughes.”

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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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