The Effect Of Government Policy On Privatization And Commercialization On Nigeria Economy (a Case Study Of Phcn, Ekwulobia)

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ABSTRACT

THE MAJOR PURPOSE OF THIS STUDY IS TO ASCERTAIN THE EFFECT OF PRIVATIZATION AND COMMERCIALIZATION ON NIGERIA ECONOMY USING POWER HOLDING COMPANY OF 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 FORMULAR. 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 SERVICE (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. IT WAS CONCLUDED THAT: BASED ON THE FINDINGS OF THE STUDY, THE FOLLOWING CONCLUSIONS WERE MADE. (I) THE GENERAL PUBLIC WERE DISSATISFIED WITH THE POOR SERVICES OF THE POWER HOLDING COMPANY. (II) THE SERIOUS FLUCTUATION IN THE SUPPLY OF POWER BY THE POWER HOLDING COMPANY WAS CAUSED BY BREAKDOWN OF THE POWER HOLDING COMPANY’S POWER STATION AT EGBIN. (III) POLITICAL INSTABILITY IN OUR COUNTRY HAS MADE IT DIFFICULT FOR THE SUCCESSFUL PRIVATIZATION OF POWER HOLDING COMPANY’S. BASED ON THE FINDINGS OF THIS STUDY AND THE CONCLUSIONS DRAWN FROM IT, THE FOLLOWING RECOMMENDATIONS WERE MADE. (I) COMPANY HOLDING COMPANY OF NIGERIA SHOULD ESTABLISH A GOOD PUBLIC RELATION BY IMPROVING ON THEIR QUALITY OF SERVICE. (II) THERE SHOULD BE TOTAL REHABILITATION AND FREQUENT MAINTENANCE OF THE POWER STATIONS AND OTHER ELECTRIC GENERATING EQUIPMENT SO AS TO SOLVE PROBLEM OF FLUCTUATION. (III) THE FREQUENT CHANGE IN THE GOVERNMENT SHOULD BE CURTAILED OR MINIMIZED SO AS TO ENABLE EFFICIENCY AND EFFECTIVENESS IN THE PERFORMANCES OF POWER HOLDING COMPANY OF NIGERIA.   (IV) EFFORTS SHOULD BE MADE BY THE GOVERNMENT AND STAKEHOLDERS FOR THE SUCCESSFUL COMMERCIALIZATION OF POWER HOLDING COMPANY OF NIGERIA.

 


TABLE OF CONTENTS

TITLE PAGE                                                            i

APPROVAL PAGE                                                    ii

DEDICATION                                                          iii

ACKNOWLEDGMENT                                             iv

ABSTRACT                                                              vii

TABLE OF CONTENTS                                           xi

CHAPTER ONE

1.1      BACKGROUND OF THE STUDY                    1

1.2      STATEMENT OF PROBLEMS                          5

1.3      PURPOSE OF STUDY                                     7

1.4      SIGNIFICANCE OF STUDY                            8

1.5      HYPOTHESIS                                                  10

1.6      SCOPE AND LIMITATIONS OF STUDY          10

1.7      BRIEF HISTORY OF PHCN                             11

1.8      DEFINITION OF TERM                                   13

CHAPTER TWO

2.0   LITERATURE REVIEW                                    16

2.1   THE EFFECT OF PRIVATIZATION AND COMMERCIALIZATION                                  17

2.2      PRIVATIZATION AND  COMMERCIALIZATION

IN OTHER COUNTRIES                                  22

2.3   PRIVATIZATION AND COMMERCIALIZATION

IN NIGERIA                                                     24

2.4   OBJECTIVES OF THE PRIVATIZATION AND COMMERCIALIZATION PROGRAMME.        30

2.5      EFFECT OF SAP ON ELECTRICITY SUPPLY PROBLEMS                                                      32

2.6      ELECTRICITY GENERATION AND TRANSMISSION CAPACITIES                                                     33

2.7      DISTRIBUTION SALES AND REVENUE COLLECTION IN A COMMERCIALIZED PHCN       41

2.8      PHCN RELATIONSHIP WITH ITS CUSTOMERS        47

CHAPTER THREE

3.1      RESEARCH METHODOLOGY                         50

3.2      RESEARCH DESIGN                                       50

3.3      METHODS OF STUDY                                    51

3.4      SOURCES OF DATA                                       51

3.5      INSTRUMENT FOR DATA COLLECTION        52

3.6      VALIDATION OF THE INSTRUMENT             53

3.7      DISTRIBUTION AND RETRIEVAL                  53

3.8      METHOD OF DATA ANALYSIS                       54

CHAPTER FOUR

DATA ANALYSIS AND DISCUSSION                      56

 

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS AND SUGGESTIONS FOR FURTHER STUDY                                                   62

5.1 SUMMARY OF THE FINDINGS                         62

5.2   CONCLUSION                                                 63

5.3   RECOMMENDATIONS                                    63

5.4   LIMITATIONS OF THE STUDY                       65

5.5   SUGGESTIONS FOR FURTHER RESEARCH    65

REFERENCES                                                 67

APPENDIX                                                       69

QUESTIONNAIRES                                         70


                          CHAPTER ONE

1.1        BACKGROUND OF THE STUDY

       The import substitution policy of the 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 of industrialization and the ideological argument that the government should control, regulate and supervise the commending 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; 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, these adverse operating conditions 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. However, by the late 80’s, the glut in the world oil market set in and it suddenly devoured on policy makers that the revenue from oil was significantly below the requirement for the sustenance of these money-guzzling ventures. There then arose the need for reprioritization of economic policies and the need to release the energy in economy suppressed by bureaucracy and undue control.

        Government both at the federal and state levels came to realize that goals of economic growth, full employment, rapid industrialization and high standard of living noble as they could not be actualized without the active participation and leadership of the private sector. It was further realized that excessive controls of government in the national economy encourage inefficiency, corruption and low capital formation. There was therefore need for invitation to private individuals and organizations to assume the role of activation and management of the national economy while the government lays the broad framework for the growth of industry and commerce. There was also the need for the infection of private sector enterprises for profitability and efficiency, hence the privatization and commercialization policy.

 

1.2  STATEMENT OF PROBLEMS.

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

        There is also 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 had should electricity is distributed without any form of restriction(s).

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

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