THE EFFECTS OF PRIVATIZATION AND COMMERCIALIZATION POLICY ON NATIONAL ECONOMIC DEVELOPMENT (A CASE STUDY OF PHCN, EKWULOBIA)
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THE EFFECTS OF PRIVATIZATION AND COMMERCIALIZATION
POLICY ON
NATIONAL ECONOMIC DEVELOPMENT
(A CASE STUDY OF PHCN, EKWULOBIA)
ABSTRACT
THE
MAJOR PURPOSE OF THIS STUDY IS TO ASCERTAIN THE EFFECTS OF PRIVATIZATION AND
COMMERCIALIZATION POLICY ON ECONOMIC DEVELOPMENT 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 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 WERE
DISSATISFIED WITH THE POOR SERVICES OF THE PHCN. (2) THE SERIOUS FLUCTUATIONS
IN THE SUPPLY OF POWER WAS CAUSED BY 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 GOVERNMENT AND STAKEHOLDERS FOR A 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 the study 2
1.2 Statement of the problems 5
1.3 Purpose of the study 7
1.4 Significance of study 8
1.5 Research questions 10
1.6 Scope/Delimitation of the study 11
1.7 Limitations of the 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 the study 45
3.2 Area of the study 46
3.3 Population of the 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 loses.
This was attributed to the inefficiency and waste in resource use, as a result
of 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
these 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 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 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
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 need for 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 infection 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 bedeviled 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 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 if electricity is 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 effects of privatization and commercialization policy on national
economic development of PHCN, 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 into the management level in the enterprise.
3.
Investigate and ascertain if commercialization and
privatization of PHCN was 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.
1.4 SIGNIFICANCE OF THE STUDY
Very
little is known about the privatization and commercialization programme.
Consequently, many people are yet to appreciate the reasons and objectives of
the programme. This research is significant in the following ways:
i.
It will provide a guide on how the
authority can improve its services of electricity to the consumers.
ii.
It will highlight means to improve PHCN
customer relationship.
iii.
The study will also suggest ways by
which the staff can be positively motivated in order to increase their
productivity.
iv.
This study will recommend better
methods for recruiting the management staff that will be more dedicated to the
service of the corporation.
1.5 RESEARCH QUESTIONS
This study sought answers to the following
research questions.
i.
Is the partial privatization and
commercialization of PHCN in line with the federal government policy of
handling of the running of public enterprises?
ii.
Is it possible for the enterprise to
operate effectively on its own without federal government subvention?
iii.
As a partially privatization and
commercialized public enterprise, will PHCN be able to restore public
confidence through improved services?
iv.
Will the partial privatization and
commercialization of PHCN lead to improvement in its operations?
v.
As a partially privatization and
commercialized enterprise, will PHCN be able to explore more avenues for
revenue generation?
1.6 SCOPE/DELIMITATION OF STUDY
This study was delimited
to the effects of privatization and commercialization on national economic
development. This study will cover specifically, the effects of privatization
and commercialization policy using PHCN Ekwulobia as an area of focus.
1.7 LIMITATIONS OF THE STUDY
The followings constitute problems in
the process of this research work:
i.
The absenteeism of some PHCN staffs
Ekwulobia business unit leading to poor response in the articulation of
questionnaires.
ii.
The poor generation of data for an
accurate analysis.
iii.
The attitude of some PHCN staffs on
the aspect of providing sincere information about their operation.
iv.
The composition of the staffs which
includes both permanent and part-time workers.
v.
The inability of the top management to
response to interview.
1.8 DEFINITION OF TERMS.
i.
PHCN
–
Power Holding Company of Nigeria.
It is the only statutory provider of electricity throughout the whole country.
It came into existence in 2005.
ii.
TCPC
–
Technical Committee on Privatization and Commercialization. It is the body set
up by the Federal Government to implement the privatization and commercialization
of some public enterprises in accordance with the privatization and
commercialization decree No. 25 of 1988. It was established on 27 of July 1988.
iii.
PRIVATIZATION:
According
to Ugbo (2003:191) privatization is all about the transformation of public undertaking
to a private enterprise organization.
iv.
COMMERCIALIZATION:
The privatization and commercialization decree of 1988 in Ugbo (2003:190)
defined commercialization as the reorganization of enterprises wholly or partly
owned by the federal government in which such commercialized enterprises shall
operate as profit making venture without subventions from the federal
government.
v.
POLICY
–
This refers to a plan of action adopted by government or social group towards
accomplishing some end for the actions and inactions of the state.
vi.
NATIONAL
ECONOMIC DEVELOPMENT – This refers to measures put in place
by government to develop the sectors of the economy simultaneously to bring in
even and rapid development of the nation.
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