The Effect of Government Policy on Privatization and Commercialization in Nigeria Economy (a Case Study of PHCN, Ekwulobia)

The Effect of Government Policy on Privatization and Commercialization in Nigeria Economy (a Case Study of PHCN, Ekwulobia)

CHAPTER ONE

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.

CHAPTER TWO

LITERATURE REVIEW

The federal government in recognition of the important role the private sector play in the economic development of the country decided to officially announce the privatization and commercialization by the Decree No. 25 of 988. This Decree among other things encouraged Nigerians to own shares in production investment mostly owned by the federal government through privatization and commercialization programme. It also seeks to make public enterprises commercially viable by allowing some enterprises to operate as commercial enterprises.

EFFECT OF PRIVATIZATION AND COMMERCIALIZATION.

Just as defined earlier, privatization is the transfer of ownership and management of enterprises concern to private investors. While commercialization on the other hand has to do with changing the way government owned companies, operate to ensure that they are run commercially and that they make profit. This means that the commercialization programme will make public enterprises to operate on purely commercial basis by charging commercial prices for their output.

Methods of privatization could be through public sales of company shares, sale of assets, transfer of shares/assets, private placement, deferred public offer, management ortmployee Buy-out, leasing to mention but a few.

However, whichever angel one sees it, privatization and commercialization, they all have both positive and negative effects on the economy as well as on the individuals.

The positive effects of privatization according to Ugbo (2008: 197) are:

1. Reducing or better still, removing the source of wastage of money. Money being spent on these enterprises will then be used in other areas that can improve the standard of living of the people.
2. New and foreign investment and technology can be attracted to the country.
3. An efficient running of the enterprises will lead to expansion and growth of the enterprises.

Negative effects of Privatization are:

1. Job Loss:It is feared that the sale of public firms will aggravate unemployment problems.
2. Price Hike:The privatized enterprises in trying to operate like private companies will equate efficiency with
3. Foreign Domination: Privatization may make a country lose its political independence, especially if the ownership of the enterprise should go to the foreigners directly or indirectly.
4. Income Disparity:Privatization is capable of promoting inequality among the citizens because when viable government firms are sold; the profits go to enrich investors who tend to be wealthier than the average taxpayer.

The following include the positive effect of commercialization:

1. i) It will bring about improvement in the managerial and general operational efficiency of the enterprises.
2. ii) It will make commercialized enterprises to be insulated from dirty political maneuvering and unprogressive beaucratic constraints.
3. The philosophy of accountability will be enthroned in the running of the enterprises.

The negative effects of commercialization are:

1. Operational and security sensibilities of some enterprises make it difficult to subject their activities to pure commercial principles. Examples are Radio/TV, Nitel, Airport etc.
2. There is the possible escalation of inflationary problem and exploration of people through over pricing of goods and services because of the need to make profit.
3. Loss of government right and opportunity to use board appointment to achieve political balance in the country.
4. Some labour – intensive enterprises may witness unprecedented escalation of retirement of workers as a result of the need to operate maximally.

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CHAPTER THREE

RESEARCH METHODOLOGY

DESIGN OF THE STUDY

Survey design was considered appropriate for this study. The study sought opinions of workers of PHCN regarding the effect of privatization and commercialization policy on PHCN. Survey instrument was however deemed the most appropriate for gathering the data required for the study, since survey design centers on people, their belief, opinion, attitude and behaviour.

AREA OF STUDY

The study was carried out in power holding company of Nigeria Ekwulobia business unit in Anambra State.

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

In this chapter, data collected for the purpose of answering research questions posed in the study were presented and analyzed. The findings were presented according to the research questions.

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION, RECOMMENDATION AND SUGGESTIONS FOR FURTHER STUDY

SUMMARY OF THE FINDINGS

The major findings of the study were as follows: –

1. There was general discontent by the public about

Power Holding Company’s Services.

1. There was serious fluctuating Power Supply from 1992 to date.
2. Political instability has contributed to the problems of Power Supply Company.
3. Power Holding Company has not been registered as a Public Limited Company.

CONCLUSION

Based on the findings of the study, the following conclusions were made.

1. The general publics were dissatisfied with the poor services of the Power Holding Company.
2. 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.
3. Political instability in our country has made it difficult for the successful privatization of Power Holding Company’s.

RECOMMENDATIONS

Based on the findings of this study and the conclusions drawn from it, the following recommendations were made.

1. Power Holding Company of Nigeria should establish a good public relation by improving on their quality of service.
2. There should be total rehabilitation and frequent maintenance of the power stations and other electric generating equipment so as to solve problem of fluctuation.
3. 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.
4. Efforts should be made by the government and stakeholders for the successful commercialization of Power Holding Company of Nigeria.

LIMITATIONS OF THE STUDY

The following limitations were inherent in the study.

1. Lack of Time: Time factor was a major setback in the study. More information would have been gathered from the staff, if not for lack of time.
2. Finance:Financial problem also constituted a major problem. Repeated visits have to be made before more data would be collected.
3. Lack of free access to Information:The researcher find it difficult to get at necessary information required for the study as most respondents were reluctant to give out information.

SUGGESTIONS FOR FURTHER RESEARCH

The following suggestions were made for further research.

1. This study should be repeated in other corporations partially or fully privatized and commercialized so as to find out the effect of privatization and commercialization on their operations.
2. Further research should be conducted to know the opinions of workers/employees of Power Holding Company of Nigeria over the commercialization of PHCN.
3. Further research also should be conducted on the attitude of the general public about the commercialization of Power Holding Company of Nigeria.

REFERENCE

• Bolton P. and Gerard R. (1992) Privatization in Central Europe and Economic Policy.
• Okeke C.C (2001) Foundations of Educational and Behavioural Research Issue and Methodology, Enugu: Academic Publishing Company
• Okafor A.I. (1995) Principles of Marketing, Nkpor-Onitsha: The Atomic Approach Bassey Printing Ltd,
• Post J.E. (1978) Corporate Behaviour and Social Change, Reston.
• Seltize C. et al (1959) Research Methods in Social Relations, London: Methuan and Loy.
• Ugbo Ifeoma E. (2008) Dynamics of Public Enterprises Management, Awka: First Fountain Publisher.
• Wolfgang D. (1987) The Business Corporation in the Democratic Society de Gruyter.

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