The Central Bank of Nigeria (CBN) has directed deposit money banks (DMBs) providing bank guarantees to Nigeria Bulk Electricity Trading (NBET) Plc and the Transmission Company of Nigeria (TCN) on behalf of the Electricity Distribution Companies (Discos) to take full responsibility for collections of the Discos’ bills.

In addition, the banks are also to charge of the remittances of the Discos to both NBET and TCN.
This is coming as some financial market analysts yesterday commended the decision by the CBN to end the age-long practice of forex exchange (FX) over-invoicing.

The directive on electricity bill collections, whose implementation is with immediate effect, was contained in a letter addressed to all banks, dated August 21, 2020, that was signed by the Director of Banking Supervision, CBN, Mr. Bello Hassan.

In the circular titled, ‘DMB-led Electricity Market Collections,’ the CBN said the move was in line with a directive of the Power Sector Coordination Working Group to improve payment discipline in the Nigerian Electricity Supply Industry (NESI) and to boost the overall quality of electricity generation, transmission and distribution.

The CBN stated that no bank should open or continue to maintain a collection account for a Disco without the express no-objection of the bank that guaranteed the power company’s exposure to NBET or TCN.

Also, the payment or settlement of all NESI-related goods or services shall be made through the banking system.

Consequently, all collections for the payments of NESI regulated goods and services provided by a Disco shall be paid into a designated account such that: collections arising from services rendered by the Disco shall be paid into an account in the sole name of the Disco and collections arising from services rendered by a third party/parties on behalf of the Disco shall be paid into an account in the joint name of the Disco and the third- party vendor(s).

The CBN directed that all energy and non-energy collections of Discos, whether cash or cashless, should only be performed by the banks.

No entity shall be permitted to collect revenues for Discos except if that entity is so authorised by a DMB in line with the relevant CBN guidelines for agent banking and agent banking relationships, therefore: the DMB shall be permitted to authorise its agents to collect energy and non- energy payments on its behalf for any Disco; the actions or inactions of the agent shall be the responsibility of the authorising DMB and any DMB found to be maintaining any account(s) for any entity collecting payments on behalf of any Disco without appropriate authorisation shall have regulatory sanctions imposed on it,

it added.

The CBN directed the banks to work with relevant stakeholders to ensure that all electricity customer payment channels/endpoints identify electricity market payments in such a way as to provide the identification of these payments and information relating to the Disco as well as the Disco account information such as account ID, customer ID, meter ID, among others.

All Disco collections (cash and cashless) shall be regarded as an energy collection and, unless identified otherwise, shall be swept automatically into a Feeder Collections Account (FCA) in the sole name of the Disco. The proper classification of accounts (into energy and non-energy) shall be the responsibility of the Disco and DMB that guaranteed the Disco or its designate bank.

AII Disco non-energy collections shall be paid into a designated account in the name of the Disco provided that: non-energy collections arising from services rendered by the Disco shall be paid into an account in the sole name of a Disco and non-energy collections arising from services rendered by a third-party vendor on behalf of a Disco shall be paid into an account in the joint name of the Disco and the third-party vendor,

it said.

The CBN ordered banks to ensure that bulk purchasers/resellers of energy maintain a dedicated and segregated account per Disco for customer energy collections for that distribution company.

The financial institutions are also to ensure that bulk resellers maintain records of energy sales and make such records available monthly and on demand to the CBN, the Nigeria Electricity Supply Industry Stabilisation Strategy Limited or any other CBN-designated entity.

It directed bulk resellers not to open or close any account for energy collections without authorisation by NESI SS Ltd or any other CBN-designated entity.

The financial institutions are also required to provide on a monthly basis and on demand, details of all accounts maintained by their agents and all third parties involved in energy collections or resale (i.e. bulk resellers, Agents, etc.) for inspection by the CBN, NESI SS Ltd or any other CBN designate.

Supervised entities acting as financing agents for the purchase of energy, or similar, shall only charge fees in line with CBN regulations,

it stated.

President Approves Cost-reflective Tariffs

Meanwhile, there were indications that President Muhammadu Buhari may have finally approved the official implementation of cost-reflective tariffs for the Nigerian Electricity Supply Industry (NESI).

Flavision learnt that effecting the new tariff which will now formally commence on September 1, 2020, was one of the preconditions given by the World Bank for a $1.5 billion loan for Nigeria.

The president signed off on the new planned electricity prices yesterday, which will be reviewed every quarter.
Of the $1.5billion World Bank loan to be approved for Nigeria, $750million has been earmarked for the power sector and is one of the preconditions for approval of the loan.

Other preconditions include the removal of fuel subsidy and unification of exchange rate, which the Central Bank of Nigeria (CBN) is implementing.

Flavision gathered that Buhari had set up a committee earlier this month to look at the issues in the Nigerian Electricity Supply Industry and come up with a report on the tariff structure among other recommendations.

The committee was given two weeks to conclude its job due to the urgency involved and was chaired by a former Managing Director of Guaranty Trust Bank, Mr. Fola Adeola.

Aside from the former top banker, other members of the committee included Prof. Charles Soludo and Dr. Doyin Salami among others.

When contacted on the new tariffs, the Chairman of NERC, Prof. James Momoh, called for patience.

However, he gave the indication that a plan was in the works and may be officially made public anytime from now.

He said:

I don’t know that yet; we are still working on it. You will hear it officially, but not from me. This newspaper approach… it is for you to all wait until we announce it. Give us this week, you will hear it.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.