Privatization And Commercialization Of Public Enterprises: Problem And Prospect (A Case Study Of P.H.C.N Ilorin)

Project and Seminar Material for Accountancy / Accounting

Privatization And Commercialization Of Public Enterprises: Problem And Prospect (A Case Study Of P.H.C.N Ilorin)


The term “purchasing” is widely used in industry, commerce, public corporation and management to denote the act, the function and responsibility for procuring materials, supplies and services.

The researcher is aware that most serious problem facing the world is the scarcity and the growing trend towards higher cost of materials and services. But it is amazing the purchasing, which can be so vital to an organization survival is still look upon it as little and not more than a clerical or routine activity.

Too many people assumed the function is just a simple exercise of processing requisition and placing order. Professional purchasing however is not a clerical task.

However, in narrow sense and considering the topic make-buy decision as an important tool for increased profitability, the term determine the need, selecting the supplies, arriving of proper price term and condition issuing the order, follow up to ensure proper delivery.

The basic element involved in the performance of this purchasing function of a coca-cola company plc, Ilorin are obtaining the proper equipment materials, supplier and services that are needed, where they are needed at the right time at the right price, in the right quantity and quality from the right source through minimum effort and cost taking into consideration make or by decision as an important tool for increased profitability at coca-cola company plc Ilorin.

Chapter One


1.1 Background of the Study

In recent times, in their effort to manage their resources more efficiently for maximum growth and development. Most countries have started to question the wisdom of investing so much in their public sector from which not much returns in terms of efficient supply of goods and services or profit ability or both could be good. However, privatization and commercialization have for long been and still remains a highly controversial topic in Nigeria. To be or not to be? This project is aimed at examining the concept of privatization and commercialization of Nigeria public enterprises, the problems associated to its implementation and its prospect.

Privatization is a global phenomenon it is basically transfer of state owned investment to the private sectors through sales or others means while commercialization is the reorganization of enterprises wholly or partly owned by the government in which such commercialized enterprises shall operates as profit ventures and without subvention from government. Such enterprises would use private sector procedures in the management of their business.

Globally, the economic crisis of the 1980 created serious problems must especially in the developing countries. This lead to the emergence of a feeling among policy makers and economic planners that have intensified the strive towards efficient and competitive domestic economic structure so as to achieve sustainable growth and development and therefore improve economic standards. Among the measure adopted in the early 80’s economic reform includes:

  1. Expansion of market: oriented structure in production distribution and consumption
  2. Elimination of reducing of state control over prices personal and other management decision
  3. Adoption of a realistic and completive exchange rate.
  4. Freeing the interest rate market from unnecessary intervention from regularly authorities.

Following this global trend ever 70 countries have undertaken one from of economic reform or another with the dominant feature being privatization and commercialization of major economic enterprises. The privatization of public enterprises is informed b y the need to run public especially in government monopolies have some motivation that made privatization and commercialization process an acceptable solution to problem of essential public infrastructure. In PHCN dynamic in particular better management process, faster corporate response to emerging changes and challenges, dynamic business orientation are some of the key motivating, programmatic attitude to business training, customer relations, competitions flexible market-driven investment focus, acquisition of up to date tools and attraction of local and foreign investment are also some of the key motivation to privatization. While privatization and commercialization program me has its strengths, some times has exposed since the advent of privatization and commercialization in Nigeria and it is known that the policy faced up to some problem in its implementation such as :

– First and foremost, they delay problems. There are considerable delays between the data privatization and commercialization decision was taken and the take-off date for example privatization programme, drew up a timetable using public enterprise that are going to be privatized under three phase. Phase one and two were stated to be privatized between July 2000 and June 2002. Companies under phase three those in the power and petrochemical. The privatization of those sectors was schedule for January 2002 to December 2003. Yet all that should have been concluded by these years has been in the cold.

– Secondly, several labour unions perceive of the policy as anti-labour. This is because, the implementation of the programme necessitate some rationalization and restricting which may eventually result in massive retrenchment many people especially those in the labour movement believe that privatization and commercialization may reduce employments particularly in the affected enterprises.

– Thirdly, in accessibility to credit problem. A fast of equity share-holders are short of funds for processing their application forms many Nigerians do not have enough money to meet their immediate needs let alone have savings to invest. In such circumstances it not unlikely only the well to do people would have funds to invest in the affected enterprises.

– Fourthly, some officials of the former supervisory ministries see the programme as plan to reduce their power over public enterprises sectors.

– Last but not the least; it may counter undue advantages on some sectors of the Nigeria community. Nigeria is a country where economic wealth, political power industrial locations are not evenly spread, privatization and commercialization may give undue advantages to some sectors.

With these itemized problems of implementation of privatization and commercialization policy above the far are not altogether unfounded hence for reaching measure have been exercise. For instance, privatization of P.H.C.N rather a number of companies engage in the generation and distribution of will power emerge.

1.2 Statement of the Problem

The focus of this study by the researcher is to identify the privatization and commercialization of public enterprises problems and prospects. Hence, in the course of the study, effort has been made to find solution the following research problem.

  1. What are the problems associated with the privatization and commercialization of P.H.C.N
  2. What are the prospects associated with the policy?
  3. What is the historical background of P.H.C.N
  4. What are rational for this policy implementation?
  5. What are the meaning of privatization and commercialization
  6. What is the impact of privatization and commercialization on the economy?
  7. The roles privatization and commercialization of Nigerian industry?

1.3 Aims and Objectives of the Study

The study has to examine the problem and prospect of privatization and commercialization public enterprises taking power holding company as case study.

The objectives of the study are:

  1. To examine the problems associated with privatization and commercialization of P.H.C.N
  2. To discuss the prospect associated with the policy
  3. To examine the historical back ground of P.H.C.N
  4. To examine the rational for the policy.
  5. To define the meaning of privatization and commercialization
  6. To highlight the impact of privatization and commercialization of Nigeria industry.
  7. To assess the roles of privatization and commercialization of Nigeria industry

1.4 Scope of the Study

The research work has limited to the scope of privatization and commercialization of Nigeria public enterprises especially P.H.C.N as a case study. It covered the introduction which examined the historical origin of P.H.C.N in the country. It will also looking at the problem cofounded in privatization and commercialization the sectors (P.H.C.N).
Importantly, the research spaced as spend a lot of time to examine supply and demand imbalance. In conclusion, the researchers summarized all he had done and gave useful recommendation and based on the research work on how best privatization and commercialization of P.H.C.N can develop and Nigeria industry as a whole.

1.5 Significance of the Study

The significance of this study is to:

  1. Serve as database for federal government toward privatization public sector in order to ensure a well developed economy.
  2. It is also to help private enterprises on how they can perform in terms of services rendered.
  3. Serve as reference materials to researchers and haps P.H.C>n planners derive useful materials for planning purpose.

1.6 Research Methodology

The researcher work on privatization and commercialization of Nigeria public enterprises. especially P.H.C.N, the researcher has made use of both primary and secondary source of data.

The primary data employed include questionnaire and interview while secondary data include textbook, internet journals etc.

The population research is basically the stuff of P.H.C.N while both descriptive and inferential statistic has been employed to present and analysis the delta collected.

1.7 Statement of the Hypothesis

The general hypothesis to be tested in this study is as following:

  • Ho: privatization and commercialization of public enterprises has no prospect.
  • Hi: privatization and commercialization of public enterprise has present.

1.8 Organization and Plan of the Study

The research work has been divided into five chapters for each presentation of the fact and figures gathered.

  • Chapter One contains the introduction, background, statement of the problem, aims and objectives, scope of the study, significance of the study, research methodology, statement of hypothesis and plan and organization of the study.
  • Chapter Two treats past literature review, research for establishment of public enterprises, rational for commercialization and privatization in Nigeria, privatization and commercialization program in Nigeria, technique committee on the program.
  • Chapter three consists of the historical overview of P.H.C.N, research method, the instrument used in data collection, method of data analysis and limitation of the study.
  • Chapter four discusses the presentation and analysis of data, problems associated with the privatization and commercialization of P.H.C.N, the prospect associated with policy and testing of hypothesis.
  • Chapter five throw light on summary, conclusion and recommendation.

1.9 Limitation of the Study

On the course of this research the following problems were encountered like short time frame financing problem scarcity of information or data must especially from the management of P.H.C.N etc. This is due to mainly the wide scope of the study which emphasizes on a complex institution like Nigeria again enough financing of the accomplishment of this work become a problem in the sense that gathering information was costly the researcher needed enough money together then.

Chapter Five

5.0 Summary, Conclusion and Recommendations

5.1 Summary

From all the indications on the research study. It is apparently cleared that all the effort of this research were channeled and completely covered an privatization and commercialization of Nigeria public enterprises: Problems and prospects, a case study of P.H.C.N. in this regard, the research succeeded in starting why it is of paramount importance and necessary to introduce the privatization program. The activities of privatization program can only be successful and effectively carried out if guard lines on privatization are obeyed by the management of P.H.C.N through the supervision of the national council on privatization (NCP) which implements the program.

The research study has examined some issue involved in the economic effect on P.H.C.N. privatization and commercialization as well as the theoretical issue in them. The research study are identify economic problem; political problem and the socio-cultural problems are the most forces that work against privatization and commercialization program on P.H.C.N.

In addition, the research study was able to lay explain on the benefit associated with the privatization of P.H.C.N which indicated that strategy investors/foreigners will bring their money and new technology into the sector (P.H.C.N) to manage the company which will now supply good services leading to growth in Nigeria economy and more jobs for the citizens.

It was further indicated In the research study that the success of the program of the program depends is on a well-designed privatization and commercialization strategies with favourable mean-economy condition and adequate financial markets and institutions.

Finally, to truly liberalize the Nigeria economy, the government must establish regulatory commission for economic sectors whose produce and serones greatly have impact on the lives of the people.

5.2 Conclusion

Privatization and commercialization are now a fact of life almost every where in the world. This research has highlighted the major problems in the policy implementation in Nigeria and the prospects at its full and vigorous execution. In principle, the program would accelerate the wealth creation process in the economy, generate jobs and reduce the public sectors burden on the economy. No doubt, more are bound to be problems, which in my views are surmountable, only if the recommendations scheme with started are needed.

Privatization and commercialization will definitely create winners and losers, therefore, requiring that a social safety must be created to help the losers especially the workers of privatization enterprises (P.H.C.N). Measure to allocate problems stemming from privatization related retrenchment (e.g severance payments) and to promote workers mobility (e.g) should be incorporated.

Government must ensures relative peace and social, political stability which sign the quality for the safety of life and poverty.

Government should also endeavour to create some regularly control on the privatized companies to ensure standard, efficiency and to guide against undue exploitation.

Finally, if Nigeria is to catch up with the rest of the world in this millennium, those basic utilities take for granted in most other countries must be adequately considered opinion, this could be achieved through property sequenced and politically acceptable privatization program. The time to take action now, if the future of Nigerians is to safeguard a place in the committee of civilized nations in the millennium.

5.3 Recommendations

Based on the discussion on the previous chapters the researchers hereby make the following recommendation;
Fulfillment of government’s commitments to greatly reduce power shortages in the short term.

  1. Management of the on-going process of private sector every into power generation without jeopardizing sector liability or unduly increasing the cost of power suppliers.
  2. Enacting a transparent regulation to the power server in place of the subsisting protective one.
  3. Creating or enabling environmental by commercially pricing of electricity services.
  4. Introduction of competition where feasible as a way of bringing prices down.
  5. Ensuring poor peoples access to power maintaining where power currently exists and expanding the system to reach those currently without access (particularly in rural areas).
  6. Advise on policies and programmers to promote restructuring and privatization within the power sector.

With these in mind, privatization and commercialization of P.H.C.N shall soon be taken as rightful place in this century.

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