1.0 Introduction
1.1 Background of the Study
Privatization has been defined in so many ways by so many people and scholars. Privatization enter proper usage in Nigeria only recently when people began to question the efficiency, effectiveness of public sector activities especially as demonstrated by the Nigeria Airways, Power Holding Corporation Nigeria (PHCN), Nigeria Railway Corporation (NRC) etc.
Privatization is not just denotiled in size of an inefficient and ineffective public sector is reduced by transferring some of its functions to relatively make efficient private sector. The performance of the private sector is measured in terms of profit ability; cost serving consumer satisfaction on the other hand, public sector performance is measured in terms of what was intended and its social benefits factor. Privatization has increasingly significant element in structural adjustment programme (SAP), both the IMF and the World Bank instead on a significant reduction in public expenditure, selective withdrawal of subsidies and adoption of other policies.
To foster the efficient use of resources so far there are about five hundred (500) companies and parastatals in which the federal government invested over N36 billion as equity loans and subvention from which she has been realizing less than N500 billion annually.
These enterprises also incurred huge debts which are being repaid and serviced by government.
About 2/3 of federal enterprises as commercial ventures. Estimates place the public enterprises, rector contribution GDP about 35% and nearly 22% of total employment in the formal sector of the economy. He goes on to say that enterprises make huge or large chain on government resources. The federal government recently estimated that about 40% non-salary recruitment expenditure and 30% of its capital budget have gone annually towards public enterprises.
These investments have provided mega yielding less than 1 billion in dividend and loan repayment from 1980-1985.
Furthermore, it has been argued that economic efficiency results in higher profit maximization. Privatization improves the general economic environment of nature through “exchange rate” and this encourages capital inflows and arrests capital flight. When foreign investors are encouraged to acquit interest in privatized state owned enterprises. Incremental equity inflows improves the balance of payment position of country and enhances the value of its currency, yet restricting large capital intensive enterprises such as NITEL and NEPA will require foreign investment and infusion of the desired capital, local and foreign investors. most attraction to the privatization programme would most certainly be the allure of participating in the ownership of some of the biggest and potentially most profitable companies in the kind and playing in the vast Nigeria market.
Private investments were therefore law. Government with relative large capital based therefore face irresistible temptations of going into direct investment in economic ventures, thus, a formal commission of commerce and industries in the defunct Anambra state Iwobi has to say: “In the early days of our political independence government felt obliged to invest directly and to combine its mandatory role of promoting the industries.
Given the recently global economic distorting governments, revenues have continued to drop. Moreover, some of this government owned enterprises have turned to constitute a draw and government purse instead of self financing.
1.2 Statement of Problems
The question of privatization came to limelight in Nigeria; not long ago following public outery against the apparent gross.
Inefficiently hand bottlenecks that seems to have made valid most public enterprises. Privatization remains an increase in significant element in the structural adjustment programme.
So far, there are about 500 companies and parastatals in which when the federal government has invested over N36 billion as equity loan and subventions from such establishments the government loan been realizing less than N500 million annually.
These enterprises have continued to remain huge debts which are being repaid and serviced by government. Ukiwe (1985) indicates that public enterprises make huge claim on government resources.
1.3 Objective of the Study
This project is aimed at achieving the following objectives
- To identify the problems or factors militating against effective privatization of some government establishment with special reference to NEPA.
- To ascertain the extent to which government involvements had contributed to the poor performance of public enterprises.
- To evaluate how privatization has contributed in many ways to the enhancement of economic development in Nigeria.
1.4 Research Questions
- Is government involvement in public enterprises instrumental to their poor performance as well as the problems confronting them?
- Are there some factors that have tended to militate against privatization of most public enterprises with specific reference to NEPA?
- To what extent has the policy of privatization contributed to economic development in Nigeria? The research works therefore seeks to also or tackle the above mentioned problems.
1.5 Significance of the Study
At the end of the day, the outcome of the research work will turn out to be great significance as indicated here under.
- The outcome of this research work could serve as a reference material for future researchers.
- My recommendation will go a long way in helping the affected organization to tackle the identified problems.
- The research will also be of help to technical committee for privatization and commercializing their objectives.
1.6 Scope of the Study
Scope refers to the areas which the researcher covered while writing the project. Due to the nature of the study, I covered NEPA located in Port Harcourt, since I used it as my case study.
1.7 Limitations of the Study
As study of this nature could have taken about one year uninterrupted, but this was not the case in this study. The study covered rather a period less than a year because of academic engagements.
- Initial unwillingness of the authority of the organization to allow the researcher to conduct the research for fear of revealing their secrets.
- The unwillingness of some employees to fill the questionnaire for fear of being victimized glared for sack.
- Financial constraints which limited the researcher from putting up more comprehensive approach to the study.
- Time constraints which also limited the researcher from adopting a more comprehensive approach to the study.
- Academic workload, which so much limited the researcher from doing a thorough and comprehensive work.
1.8 Definition of Terms
Privatization:
It is the process of directing government ownership, control and management of enterprise services and agencies to the private sector consisting of private individuals of forms seeking their own profit. Privatization is not confined to any subject of any nation's economic and social structure.
Privatization programme could be pursued in manufacturing, agriculture and transportation. Sub-sectors or excess in the provision of basic services such as water, power, education and health.
Public Sector:
This is an establishment owned, financed and managed by the government either state or federal. It is mainly for providing services to the people with little or no profit. Government normally subsidizes them.
Private Sector:
This refers to the part of the economy not directly under state control. They are owned, financed and managed by the owners usually individual or group of individuals.
Enterprise:
A business company or firm, local, large –scale or state owned. It is a business activity developed and managed by individual or state.
1.9 Brief History of Your Case
The history of National Electrical Power Authority (NEPA) can be traced back to the end of the 19th century when the first generating power plant was first installed in Lagos in 1898. From then until 1950, the pattern of electricity development was in the form of individual electricity power undertaking scattered all over the towns.
Some of the few undertaking was federal government bodies under the public works department, some by native authorities. In January 6th, its first general manager was appointed. Despite the problem faced by NEPA, the authority has played an effective role in the nation's social economic development thereby steering Nigeria into a greater industrial society.
The success story is as a result of hard work and careful planning. The statutory function of the authority is to develop and maintain an efficient coordinated and economical system of electricity supply through the federation.
The decree further states that the monopoly of all commercial electric supply shall be enjoyed by NEPA to the exclusion of all other organizations. This does not however prevent private individuals who wish to buy and run thermal plants for domestic use from doing so. NEPA has been granted partial autonomy.
The federal government has divided the National Electric Power Authority (NEPA) distribution sector into separate companies or entities that will be called (LCD) among the regions.
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