ABSTRACT
In this research work, we considered “The Economy impact of the privatization of the Power sector in Nigeria”. Our major concentration was on the Nigeria market because Power is a very broad research topic.
This project has helped us know that deregulating the Power sector has contributed immensely to the Nigeria Economy positively. In order to get this, we looked at privatization in the real sense, what deregulating the power sector means and its impact on the economy. A descriptive method was employed in looking at this topic based on the usefulness in accomplishing a task.
This findings revealed that the economy has been affected positively through the privatization of the power sector in Nigeria, and has led to nation. building to a great extent.
CHAPTER ONE
Introduction
1.1 Background of Study
The importance for the establishment of public enterprises or corporations was felt in 19th Century and thereafter. There were a lot of upheavals in European society because of industrialization and urbanization. Social issues like unemployment and economic inequalities necessitated state intervention in economies. Britain is widely referred to as the father of public enterprises. A good number of African Countries chose the public sector for economic and social development. This account for the reason why many more functions like industrial production, transport, social services, communication etc were assigned to the state in addition to its traditional functions like security, justice etc.
Despite the several exercises of Nigeria economic policies to promote agriculture, industries and other activities, government still depend on monoculture commodity (oil) which failed to provide good capital investment and development due to weak technological base, poor managerial skill etc. This promoted or enhanced the desire to establish various enterprises and massive establishment of government agencies and institutions. The Nigerian constitution of 1979 described the official operating of these enterprises and public servants that managed them as well as those of the private enterprises. For example, after reviewing the performance of the Nigeria Railway Corporation in 1967 the commission that carried out the exercise recommended that corporation should have an Executive Board whose Chairman would also be the Chief Executive.
The government enterprises require constant financial backing for the smooth running. Due to inadequate capital and lack of financial autonomy public enterprises in Nigeria are confronted with a lot of problems, by managers and employees, government interference, inadequate capital, technological limitation, and political interference in the affairs of public enterprises in Nigeria. Since mono-cultural economy cannot meet the demand or generate large sum of revenue to run the economy or by public enterprises, the government seeking ways to reduce the rapid increase of bad economy by adopting policy to boost our economy. Electricity is the bedrock of socio-economic development of any nation hence priority must be set for its adequate budgetary funding, availability, accessibility, and in Akwa Ibom State in particular and in Nigeria in general.
Incessant power failures have caused irregular production and low utilization of resources in industries and educational institutions while the Nigerian government has also been embarrassed on several occasions when Power Holding Company of Nigeria (PHCN) switched off power during government official functions. The PHCN has thus become an object of ridicule and opprobrium for over two decades. The PHCN has to contend with internal and external environmental hostilities and constraints such as poor funding of the enterprise, corruption, excessive control by the Federal Government, vandalisation of its equipment by hoodlums, fraud, shady dealings, poor maintenance of electricity infrastructure, bad weather and erosion menace and debts owed it.
Privatization and commercialization policies are adopted by Federal Government as a remedy to problems that emanated from public enterprises. There are economic policies which grant full autonomy to public enterprises so that they can operate without government subvention, control and interference which ultimately resulted in efficient provision of service and high productivity that contribute to national growth and development. Although, these two concepts have identical goals and purpose, that is provision of efficient services to the public, high productivity and profitability, yet, they are different in nature and character.
The Federal Government of Nigeria in (1988) through Decree No. 25 set up the Technical Committee on Privatization and Commercialization (TCPC). The TCPC was charged with the responsibility of privatization and commercializing some selected government enterprises. The main reason was to promote greater efficiency and productivity in the public enterprises. This research therefore sets out to examine and analyze the relationships among elements for effective performance of the Power Holding Company of Nigeria Limited, a public enterprise established, financed and managed by the Federal Government of Nigeria. The paper utilized both primary and secondary data and data with a view to seeking answers to the broad question of the factors within the perceived organizational environment of the PHCN, government intervention, role and constraints as they are related in a positive or negative manner to the effective performance of the privatization and commercialization of PHCN.
1.2 STATEMENT OF PROBLEM.
Public enterprises were established by the Federal Government especially in the 1960s and early 1970s when the public sector was seen as a major contributor to economic growth and sociopolitical stability. Public enterprises in Nigeria are set up by government to perform definite social and economic functions for the public. The reasons for these public enterprises are to control the resources and raise funds for the provision of certain infrastructure facilities particularly in service requiring heavy financial investment e.g. Railway, Electricity, Telecommunication etc. also, to perform the function of generating revenue that will add for financing development programme and projects as veritable instrument for creation of jobs. Therefore, since those functions are not performed, creditable, or efficiently privatization and commercialization policy is introduced by Federal Government of Nigeria. In identifying the problems militating against their performance, the problems are stated clearly below:
1. Is political interference and mismanagement of resources responsible for the poor performance of public enterprises in Nigeria?
2. Could policy of privatization and commercialization enhance the efficiency of public enterprises?
3. Does the privatization and commercialization improve the potential, the efficiency and service delivery in Nigeria telecommunication?
1.3 RESEARCH QUESTIONS.
Considering the projects topic. The economy impact of the privatization of the power sector in Nigeria, solutions will be proffered to the following problems:
1) Why do government deregulate the power sector in Nigeria?
2) What are the importance of privatization to power sector?
3) What are the effects of privatization on the growth of power sector in Nigeria.?
4) What benefit do governments derive from the growth of power sector?
1.4 OBJECTIVES OF THE STUDY
For every Endeavour of man on earth there are some objectives of this study include the following.
1) To trace the History of power in Nigeria.
2) To examine the effect of past government monopoly policy on power sector in Nigeria.
3) To enumerate measures of privatization in the power sector.
4) To identify and examine the effect of privatization on the growth of power sector in Nigeria.
5) To identify the challenges facing power sector in Nigeria.
1.6 HYPOTHESIS
Ho Privatization has a no significant relationship with economy of Nigeria.
Ho Privatization doesn’t create more job opportunities to citizens in Nigeria.
1.5 SIGNIFICANCE OF STUDY
The importance of any research is tied to find out solutions to the various problems that face mankind in the environment or society. The study creates awareness to every citizen of this country and economic planners on the implications of these privatization and commercialization of the public enterprises in Nigeria economic development. It will help policy makers to assess the performance of PHCN following the privatized and commercialization policy. It helps researchers on contemporary issues have first-hand knowledge of the performance of privatized and commercialized public enterprises.
1.5 Scope of the Study
The scope of this study is limited to the activities of privatization and the commercialization of public enterprises in Nigeria which was enhanced as a result of the inadequacy and failure surrounding its activities and programmes to the public which are the major benefactors of the services been rendered by these public corporation. It is limited to the effect of Privatization and Commercialization of Power Holdings of Nigeria Limited (PHCN).
1.6 Definition of Concepts
This study is made up of important concepts on the outright sale of government owned companies to private individuals in terms of privatization and the operation of government enterprises as profit making ventures that changes market prices for their operations in the commercialization process. These concepts are as follows:
Public Enterprises: Public enterprises are enterprises set up by government to perform definite social and economic functions for the public.
Privatization: Privatization can be defined as narrowly as the transfer of government owned shareholding in the designed enterprise to private shareholders, comprising of individuals and corporate bodies. It is the policy of selling off public enterprises to individuals, groups and organizations; they should operate under the principle of profitability, effectiveness, efficiency and viability than in public interest.
Commercialization: Commercialization on its own, means the re-organization of enterprise wholly or partly owned by the government in which such commercialized enterprises shall operate as profit making commercialized enterprises shall operate as profit making commercialized ventures without subvention from government it is a policy in which government grants full commercial status to corporations which enable them to operate strictly under business principles and practices without government control or interference and exercising absolute financial autonomy.
Government owned companies: these are companies hold, directed and controlled by the government. e.g. NNPC
Political Interference: It can be defined as a situation whereby the government or leaders are in control of the affairs or activities of the public for their own interest.
Monopoly power: the excess of price over marginal cost is a measure of monopoly power.
Private sector: this is that part of a country’s economy consisting of privately-owned businesses etc.
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===================================================================Item Type: Project Material | Size: 63 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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