THE EFFECT OF GOVERNMENT POLICY ON PRIVATIZATION AND COMMERCIALIZATION ON NIGERIA ECONOMY (A CASE STUDY OF PHCN, EKWULOBIA)
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THE EFFECT OF GOVERNMENT POLICY ON PRIVATIZATION
AND COMMERCIALIZATION ON NIGERIA
ECONOMY (A CASE STUDY
OF PHCN, EKWULOBIA)
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.
1.3 PURPOSE OF STUDY
The major purpose of this study was to
determine the effect of privatization and commercialization on PHCN, Ekwulobia
business unit (branch) in Anambra
State. Specifically, the
study was to:
1.
To determine the durability of PHCN’s
plant in the generation of electricity.
2.
To determine an efficient method of
appointing capable persons into the management level in the enterprise.
3.
To investigate and ascertain if commercialization of PHCN was
in line with the objectives of the government
on privatization and commercialization.
4.
To ascertain an easy mode of operation
in PHCN towards
ensuring self-sustenance and justification of investment.
5.
To find out effective methods that
would enhance the service rendered by PHCN to it customers.
6.
To suggest means or ways by which PHCN
can restore public confidence in its service of electricity to consumers.
7.
To identify better methods by which
PHCN can effectively collect its services charges.
1.4 SIGNIFICANCE OF THE STUDY
Very
little is known about the privatization and commercialization programme.
Consequently, many people are yet to appreciate the reason and objectives of
the programmes. This research is significant in the following ways:
i.
It will provide a guide on how the
authority can improve its service 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
method for recruiting the management staff that will be more dedicated to the
service of the corporation.
1.5 SCOPE OF STUDY
This study was
delimited to the effect of privatization and commercialization of Power Holding
Company of Nigeria Ekwulobia Branch, Anambra
State. No attempt was
made to look into the effect of privatization and commercialization on other
corporations and organizations.
1.6 RESEARCH QUESTIONS
This study sought answers to the following
research questions.
i.
Is the partial 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 commercialized public
enterprise, will PHCN be able to restore public confidence through improved
services?
iv.
Will the partial commercialization of
PHCN lead to improvement in its operations?
v.
As a partially commercialized
enterprise, will PHCN be able to explore more avenues for revenue generation?
1.7 BRIEF HISTORY OF PHCN
PHCN
means Power Holding Company of Nigeria.
It is a body that is in responsible for the supply of light and power in the whole
country. Power Holding Company of Nigeria was formed in 2005, which
was formerly known as NEPA: meaning National Electric Power Authority. This
body existed since 1972 following the amalgamation of Electricity Corporation
of Nigeria
and the Niger Dam Authority under Decree of 1972 and since then it was the only
statutory provider of electricity to the whole public. PHCN has no competitor
even up till now that the name had change from NEPA to PHCN. It has its power
stations and offices in many parts of the country, there is also Hydro-stations
at Kainji at Oji River in Enugu State,
one in Nebba and other places. In Anambra state, there are PHCN offices like in
places like Onitsha,
Nnewi, Awka, Ekwulobia, Oko, Ajalli etc.
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 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.
UNDP
–
United Nation Development Programme. It is an agent of the United Nation, which
assists member nations with development programmes. It also advises nations on
the path to their economic survival.
iv.
MOTIVATION
–
This is a method of stimulating people into action so as to achieve a desired
goals or objectives.
v.
PRIVATIZATION:
According
to Ugbo (2003:191) privatization is all about the transformation of public
undertaking to a private enterprise organization.
vi.
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.
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