Assessment Performance of Public Utility in Nigeria - Assignment Example

Utility as defined by the oxford advanced learners dictionary is a service provided for the public. It is a service used by everyone. Utility services covers a wide range of activity including electricity, water, transportation and Telecommunication. These services impact greatly on a country’s economic growth and the living standards of the people. They affect the ability of the local industries to produce products that can compete favourably on the international market.

The provision of these services in Nigeria as in many developing countries has been left in the hands of state owned i. e public enterprises. It was argued that in some cases, government is the only organ seemingly capable of raising the needed capital to start up such enterprises (Yesufu, 1996 P. 339). Furthermore, public enterprises were better for stimulating and accelerating national economic development than private capital (Obasanjo, 1999p. 1). However, judging by the experiences of many African countries, Kerf and Smith (1996. . 2) opined that public enterprises have established a reputation for poor performance. Such enterprises often have poorly defined and conflicting objectives which are political rather than economic. They are faced with weak or perverse incentives for efficient performance since managers are not accountable for their actions. They employ excessive labour, who are often unqualified for the task they are entrusted with and engage in investment decisions, that do not provide positive economic contributions.

The power sector has suffered under the worst criticisms of public utility enterprises. The organization responsible for electricity production and supply in Nigeria, the National Electric Power Authority has been nicknamed-‘Never Expert Power Always’ by the public because of too frequent power supply interruptions. A large proportion of the population, about sixty per cent (60%) does not have access to electricity (Imoke 2001 P. I; Mbendi 2001 P. I. ). Industries and affluent households as a result have resorted to self provision often at high cost.

A non technical and bill collection losses of over forty percent (Afro News, 8 June 2004,Pg 1) and transmission and distribution losses in excess of thirty per cent (Mbendi, 2001 P. 1) are reported. The government has also estimated that the nation lost some eight hundred million U. S dollar ($800m) to NEPA’s inefficiency alone (Barsky, 1999 p. 1. ). Further, this organization is heavily dependent on subsidies and government funding of capital projects. The inadequacy of NEPA to provide uninterrupted power supply needed for enhancing industrial and economic growth is all too glaring.

Successive governments, in appreciation of the problems faced by NEPA and indeed other parastatals, have introduced a number of reforms in an attempt to improve their performance. While many public enterprises including those in banking, insurance and manufacturing have been privatized, utility enterprises such as NEPA and NITEL were commercialiased. This effort the government soon found out was not enough to solve NEPA’s problem.

The enterprise is still unable to satisfy electricity demand, state of electricity remained poor, pointing to the need for more drastic reforms. Thus, government has been preparing NEPA and other utilities for privatization. What is responsible for this continued level of inefficiency despite commercialization and other reforms, and how can private sector participation bring about the desired positive change in performance are the questions focused in this study.

The main aim of this study is to make/conduct an assessment on the performance of public utility enterprises in industrial development: A case study of the national Electric Power Authority. Also in answering the questions posed above within context of the problem statement, the study will among other objectives: -Examine the history of Public Enterprises in Nigeria

-Highlight the historical Development of the Power Sector -Appraises the Current State of NEPA -Evaluates the Implication of this Current State -Looks at the Reorganization that have taken place so far -Measures the Performance of the Sector vis-A vis Electricity Generation and Industrial Consumption -Suggests and Profers Solutions for Improving the Sector.

The importance of this study would be appreciated when one views the essential need of uninterrupted power supply for industrial and National development. The study will thus be of great need to correct the inefficiency in the sector, manifesting in incessant power outages, showing its performance and the need for more drastic reforms.

In line with the objective of measuring the performance of the sector Vis-A- Vis Electricity Generation and Industrial Consumption; the following hypotheses in measurement, shall be adopted as a guide: Ho1: Performance of NEPA is not a significant explainer of Industrial Development H12:Performance of NEPA is a significant explainer of Industrial Development Ho2:Electricity Generation is not a determinant of the level of Industrial Consumption H12:Electricity Generation is a determinant of the level of Industrial Consumption

The work gives an evaluation to the performance of NEPA in Industrial Development in Nigeria from the SAP era of Liberalization down to the post SAP era, and then take on an analytical departure from 1986-2003 with particular focus on power Generation and Industrial Consumption. The choice of 1986 as the base year is premised on the fact that, it marked the commencement of the liberalizing the economy for private participation; while the choice of 2003 as the terminal date, is taken on the informed ground, that the required data are available only up to this date.

However, the conduction of this research is not without some fundamental hitches, which are, to a very large extent, encountered in most research studies. Worthy of mention are the qualities and the dearth of data etc. These however are not likely to produce a misleading statistical inferences, because the official sources from where the data employed are collected are highly reliable and dependable.

This is a service provided by the public. It is a service used by everyone. Utility services cover a wide range of activity including electricity, water, transportation and telecommunications. These services impact greatly on a country’s economic growth and the living standards of the people. They affect the ability of the local industries to produce products that can compete favourably on the international market. The provision of these services in Nigeria as in many developing countries has been left in the hands of state owned enterprises.

Privatisation: This is the concept used to refer to the withdrawal of state from economic enterprises and the transfer of same to private investors.

Liberalisation: This is a concept used to describe the removal of the control which developing countries exercised over their economies and markets with a view of returning the economies to efficiency and grow.