CHAPTER ONE
1.1 INTRODUCTION
Recently, the mismanagement of our
parastatals has been a subject of debate. The inefficient utilization of
resources and financial mismanagement of most of public sector enterprises over
the years resulted into a very weak economic balance sheet, excessive debts
incurring and in most cases negative network.
In addition, the fact that the insolent
performance of the state in administration of public business establishment
creates a situation in which national funds that could have been used or spent
to generate new economic activities and employment opportunities are being used
to subsidize “dead wood that will never grow nor change” as analogy for the
public enterprises.
Taking survey of the phenomenon of
privatization and commercialization has also been extend to garbage collection,
bore-hole drilling, air traffic control and likes many other countries like
Britain, USA, Spain, Italy are also involved in various degrees in the process
of privatization and commercialization and this is not so exceptional case with
Nigeria.
Privatization and commercialization is
seen to many observes as a situation to our economic predicament. The debate in
privatization has been on the presumed efficiency of the private sector
vis-à-vis the public enterprises and how the latter can be made more responsive
to market forces and signs. It has been realized that inefficient companies are
typical drain on national treasures and that they contribute greatly to the
enormous current debt problems.
Thus, if efficiency can be elevated in
relating to profitability cost saving and consumer satisfaction and the liks.
Do we consider privatization and commercialization to be the solution and to
what proportion should factors of production and distribution be held by the
state private individuals.
As government could no longer continue
to support the monumental waste and inefficient of these public enterprises,
the programme of privatization and commercialization was developed to address
our peculiar socio-economic and political condition.
1.2 STATEMENT
OF PROBLEMS
A research in into over 127 public
companies and corporation as at the end of 1990 showed that the return of
government N36 billion invested was not encouraging. At today replacement
costs, they are probably worth about N200 million as stated by our former
present, Gen Abubakar (rtd). Appraising the system, the former head of state
said “is clearly unsustainable and injustivable in a period of dividing
financial resources”.
Among the problems encountered by the
process of privatization and commercialization includes;
–
Problem of over
supervision of parastatals by the supervising ministries is government able to
grant enough freedom of action to the state owner establishment.
–
Problem of subjective
criteria in appointment of executive of parastatals. Are chief executive and
principal functioning of parastatals appointed because of their integrity and
capability to deliver and not because of nepotism.
–
Problem of political
interference in considering the problem of our parastatals will government
inference not create chances for political meedle someness and large scale
competition, retention of redundant staff, prostitution of disciplinary
procedure by ethnocentric considerations, award and inflating frivolous
contracts, appointment of board members and employee that do not possess the
relevant knowledge and experience? Will all these the relevant factors not
erode the efficiency, effectiveness and productivity of public business
enterprises? All these shall be looked into in the course of study.
1.3 OBJECTIVE
OF STUDY
A company’s or corporation’s main
objective is profit realization. This objective of prompt making ca not be
achieved when the company or corporation in question is being operate at a
loss. Privatization and commercialization of public enterprises is not an end
itself nor is it a panacea for the ills of the public enterprises.
To this, the following are the
objectives of the study.
i.
To restructure and
rationalize the public sector in order to lesser the dominance of
unproductive investment in the sector.
ii.
To increase efficiency
of government-owned enterprises.
iii.
To ensure positive
returns on pubic sector investment in commercialization enterprises.
iv.
To check the present
absolute dependence of commercialization oriented parastatals on the treasury
for funding and to encourage their approval to the capital market.
v.
Increased competition
that is capable of leading to improve efficiency.
vi.
Development of under
business relations
vii.
Creating favourable
investment climate for both local and foreign investors.
viii.
Re-definition of
organizational objectives and implementation of its policies.
1.4 SCOPE
OF THE STUDY
In recent years, the idea of
privatization and commercialization has gained universal appeal in all part of
nations.
The time scope of this research could be
the periodic depth of the research, time scope determine the depth of the data
to be collected on the case study.
The industrial scope is the
specification of the industry of study and the industrial scope of this
research is (PHCN) Power holding company of .
Theoretical scope is about the aspect if
the subject matter that the researcher covers. And this research work,
theoretical scope is the benefit of privatization and commercialization.
1.5 SIGNIFIANCE
OF THE STUDY
The importance of
privatization and commercialization to companies enable the companies to
exploit the available opportunities of production and profit maximizing.
The importance of privatization and
commercialization could enable the market or consumers to get their needs
satisfied and therefore improve the standards of living.
The importance of privatization and
commercialization to students as a writer who engages on the study in the
partial fulfillment of the requirement of the award of Higher National Diploma
in Marketing.
The research also broaden the
academicians knowledge and likewise the researcher will be able to withstand
any tasks of this nature in future assignment.
1.6 LIMITATIONS OF THE STUDY
The limitation could be
secrecy: this connoles the situation whereby the needed information is being
kept for confidential reasons; and this serves as a threat to the researcher.
Financial constraints: This
could also occur as a result of lack of find for the properrunning of the
research work nad if this is not sufficienty and not effective to solve problem
at hand.
Fime constraint: the research time is
always bery long, and if proper time or adequate time is not being given to the
researcher the work will be meaningless and the reseaecher will be unable to
solve the problems time is more vital in carrying out a research work,
regardless of the type of research being it primary or secondary research.
Wrong sampling could also be a problem
or threat to a researcher. A situation whereby a researcher collects and
analyzes wrong sample, this will make the research work not reliable and become
more complex.
1.7
DEFINITIONS
OF TERMS
1.
Privatization:
is the transfer of ownership and control right over firms from the government
owned industries to private sector.
2.
Commercialization:
This is the withdrawal of government
funding from parastatals to enable this operate commercially to fund for its
existence of operation.
3.
Performance
contract: this is said to designed to govern the
relationship between the government and commercialized enterprises.
4.
Economy:
Avoidance of waste of money, strength pr
anything else of value.
5.
Resources:
Wealth, suppliers of goods, raw
materials etc. which a person, country, company has or can use.
6.
Owner’s
equity: The financial interest of the owners.
7.
Values:
Is the amount obtainable in the market
for the exchange of goods and services. This is the owrht of an asset
prevailing at a particular period of time.
8.
PBIT:
Profit before interest and taxation
9.
C.E:
Capital employed
10.
Paid:.
Profit after interest and taxation
11.
Asset:
Assets are things of value owned by the business. They are also resources of
the business.
12.
Terms
of agreement: This is said to be the rules or
agreement that governs the privatized company and the government.
13.
Stewardship
accounting: Act of giving doubt free account
one’s property and resources being managed.