Public Administration

The Economic Implications of the Privatization of the Power Sector in Nigeria

The Economic Implications of the Privatization of the Power Sector in Nigeria

ABSTRACT

The major purpose of this study is to ascertain the economic implications of the privatization of the power sector in Nigeria, Ekwulobia as a case study. the reason behind using the power holding company of Nigeria is because it is one of the public enterprises that its product has the widest consumption. the population of the study consisted of 254 workers in Phcn Ekwulobia Anambra State. the sample size was determined using yaro yamene formula. the sample of 155 out of 254 was drawn using simple random sampling. five research questions were formulated which guide the study. a structured questionnaire was developed and validated for use. table and percentage were used to answer the research questions. the major findings of the study were: (1) there is general discontent by the public about PHCN’s services (2) there was serious fluctuating power supply from late 1992 to date (3) political instability has contributed to the problems of PHCN (4) PHCN has not registered as a public limited company. thereafter, it was concluded that: (1) the general public was dissatisfied with the poor services of the PHCN. (2) the serious fluctuations in the supply of power were caused by the breakdown of the power holding company’s power stations. (3) political instability in our country has made it difficult for the successful privatization of PHCN. the following recommendations were made: (1) PHCN should establish a good public relation. (2) there should be rehabilitation and maintenance of the power stations. (3) efforts should be made by the government and stakeholders for the successful privatization and commercialization of PHCN.

TABLE OF CONTENTS

TITLE PAGE i
APPROVAL PAGE ii
DEDICATION iii
ACKNOWLEDGMENT iv
ABSTRACT vi
TABLE OF CONTENTS viii

CHAPTER ONE
1.0 Introduction 1
1.1 Background of study 2
1.2 Statement of the problems 5
1.3 Purpose of study 7
1.4 Significance of study 8
1.5 Research questions 10
1.6 Scope/Delimitation of study 11
1.7 Limitations of study 12
1.8 Definition of term 13

CHAPTER TWO
2.0 Introduction 16
2.1 Effects of privatization and commercialization policy 17
2.2 Privatization and commercialization in other countries 23
2.3 Privatization and commercialization
In Nigeria 24
2.4 Objectives of privatization and commercialization programme. 30
2.5 Effect of sap on electricity supply problems 32
2.6 Electricity generation and transmission capacities 34

2.7 Sales and revenue collection in a commercialized
PHCN 39
2.8 Summary in literature review 42

CHAPTER THREE
3.0 Research methodology 45
3.1 Design of study 45
3.2 Area of study 46
3.3 Population of study 46
3.4 Sample size/sampling techniques 46
3.5 Instrument for data collection 47
3.6 Reliability and validation of the instrument 48
3.7 Distribution and retrieval of the instrument 49
3.8 Method of data analysis 49

CHAPTER FOUR
4.0 Data presentation and analysis 51
4.1 Presentation of findings 51
4.2 Discussion/Analysis of findings 54

CHAPTER FIVE
5.0 Summary of findings, Conclusion and Recommendations 57
5.1 Summary 57
5.2 Conclusion 58
5.3 Recommendations 59
References 60
Appendix 62
Questionnaires 63

CHAPTER ONE

1.0 INTRODUCTION

The privatization and commercialization of public enterprises in Nigeria was an initiation of the country’s military leaders. The review of the economy in 1985 revealed that most government parastatals were running at great losses. This was attributed to the inefficiency and waste in resource use, as a result of the lack of application of capital economic principles in the management of these parastatals.

In an attempt to stem this situation, the Babangida administration decided to privatize and/or commercialize some of this obviously ailing public wealth with the hope of reducing government wasteful expenditure and improve income generation through the commercialization principle.

1.1 BACKGROUND OF THE STUDY

The import substitution policy of post-independence Nigeria led to the establishment of industries. Apart from this prime motivation for import substitution, there was the need to create jobs for the growing educated youths, the need for industrialization and the ideological argument that the government should control, regulate and supervise the commanding heights of the then-nascent economy.

Furthermore, there was the need to strive to catch up with the developed countries of the world and since the indigenous businessmen and managers were neither technically nor financially ready to assume the catalyst role which their counterparts in the developed countries were playing; the government felt obliged to fill the investment gap. The obvious imperfections in the market-oriented economics in terms of resources allocation to the more profitable but less preferred sectors of the economy was yet another reason for government intervention in the economy.

The sum total of these is that between 1960 and 1980 the various governments in Nigeria both at federal and state levels established numerous industries. The core characteristics of most of these industries were inefficiency in the utilization of resources and their consequent dependence on the public treasury for subvention. Therefore, this adverse operating condition could not make for rational economic decisions. Consequently, these enterprises and their management lost their mission and became pipes for wastages, agencies for political patronage and generally parasites on the national and state treasuries. There then arose the need for reprioritization of economic policies and the need to release the energy in the economy suppressed by bureaucracy and undue control.

Government at various levels realized that goals of economic growth, full employment and high standard of living could not be actualized without the active participation and leadership of the private sector. There was, therefore, a need for an invitation to private individuals and organizations to assume the role of activation and management of the national economy. There was also the need for the injection of private sector enterprises for profitability and efficiency, hence the privatization and commercialization policy.

1.2 STATEMENT OF THE PROBLEMS

Inefficient management and corruption have bedevilled the Power Holding Company of Nigeria (PHCN) since its inception. This is most evident in its power generation, transmission, and distribution as well as in its appointment of board members. This inefficiency has subsequently led to an inadequate supply of electricity to consumers.

There is also a lack of dedication to duty on the part of the staff and management of the corporation. This mostly accounts for the poor financial returns it derives from its services. The staffs are rough in using the company’s equipment and tools in providing electricity to consumers at the expense of the authority. There were complaints of corruption in power distribution whereby the management seeks qualification first before approving of extension of electricity to consumers. This often robs the authority of huge revenue they would have if electricity were distributed without any form of restrictions.

PHCN ever since its inception in 2005 from the former NEPA has undergone and is still undergoing stringent statutory and administrative control which hinders the management from using their initiatives when necessary.

1.3 PURPOSE OF STUDY

The major purpose of this study is to determine the Economic Implications of The Privatization of The Power Sector in Nigeria, Ekwulobia Business Unit In Anambra State.

Specifically, the study was to:

1. Determine the durability of PHCN’s plant in the generation of electricity.

2. Determine an efficient method of appointing capable persons to the management level in the enterprise.

3. Investigate and ascertain if the commercialization and privatization of PHCN were in line with the objectives of the government on privatization and commercialization.

4. Ascertain an easy mode of operation in PHCN towards ensuring self-sustenance and justification of investment.

5. Find out effective methods that would enhance the service rendered by PHCN to its customers.

6. Identify better methods by which PHCN can effectively collect its services charges.

7. Suggest means or ways by which PHCN can restore public confidence in its service of electricity to consumers.

REFERENCES

Ebie, C.O. (1986) “Restructuring the Nigerian Economy: The place of privatization” Bullion No. 10.

Federal Government of Nigeria (1988) Privatization and Commercialization Decree No. 25.

Obi et al (2008) Government and Politics of Nigeria: The Struggle for power in African State Onitsha: Book point publishers Ltd.

Ozor, E. (2004) Public Enterprises in Nigeria: A Study of public policymaking in a changing political economy, Ibadan: University press plc.

Ramanadham, V.V. (1987) Studies in Public Enterprises: From Evaluation to Privatization London: Frank Cass and Coy Ltd.



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