Cost Of Diesel: Banks Embrace Solar Energy, Inverters, UPS

In a bid to cut down on the increasing cost of diesel and spare parts of generating plants, many of the Deposit Money Banks (DMBs) have opted for alternative power sources to run their businesses.
Leadership learnt that while some of the banks are already in a pilot stage of test-running solar panels in some of their branches, others have perfected the use of inverters in running their ATM machines across the country. It was also gathered that some of the banks use UPS as support in some of their operations without reverting their generating plants.
Categorically, the managing director of Wema Bank, Segun Oloketuyi said, the bank has become very prudent in the management of its resources to deliver on set goals. Like the old adage: when the going gets tough, the tough keeps going, the managing director said, some of the departments that have no reason to stay beyond a certain time are made to close early to save fuel consumption.
The price of diesel had in recent times gone as high as N210 per liter, spiking the cost of operation as irregular power supply had necessitated the use of power generating plants not only for the banking halls but also for the ATM.
Earlier in the year, at the peak of the fuel scarcity, most banks had closed shops due to the unavailability of diesel. Many had closed earlier while others planned to shut down ATM services after fuel scarcity caused by striking oil marketers sent black market fuel prices to a record high.
Consequently, some banks as a cut cutting measure had resorted to the use of inverters to run the ATMs and also for major operations .Last year, five banks had spent N18.78 billion in fuel and maintenance costs, an expense that is eating into their declining income.
While some banks with a smaller branch network had spent close to N400 million in fuel and maintenance costs, bigger banks with a large branch network are the most affected as they have to spend more in fueling and servings get their power generators. One of the top tier banks had in 2015 spent up to N10.36 billion in fuel and maintenance cost while another had spent up to N5.78 billion on generating power to run their operations last year.
The growing cost of operation, alongside the rising non performing loans in the banking industry has been evident also in the six months result of banks for the first half of 2016 as they continued to post lower profit. Eight banks had recorded a total profit of N111.13 billion, a 14.3 per cent decline compared to N129.73 billion which had been recorded in the first half of 2015.
Although the 2015 results of the industry had shown a declining profit, there are indications that the situation would not get better as analyst predict a lower profit from the industry at the end of 2016 financial year.
According to the Managing Director and Chief Executive of Suntrust Bank, Nigeria’s first full financial technology bank, the cost of maintaining a large branch network had been a dead weight for the banking industry. Stating that Sun Trust would only have the minimum number of branches needed to operate as the cost of operation of most banks “are growing under the weight of branch network which we know that it costs a lot of money to maintain a branch.”
To save costs, some banks had begun test running the use of renewable energy such as solar energy. One of them, Sterling Bank recently commenced the pilot scheme of its solar plan. Likewise, Fidelity Bank which had spent over N372 million in 2015 generating electricity said it is using UPS and inverters to power its ATM and its major operations.
This cost cutting measure is becoming more popular among the banks as recent directive by the federal government and tussle with labour unions had made it hard for them to cut cost by shedding staff weight.
While most renewable energy requires a higher capital investment initially analysts say in the long run the costs associated with generation and maintenance over the lifetime of the systems are marginal. As such, they are economically viable especially in developing nations.

Leave a Reply

Your email address will not be published. Required fields are marked *