FINANCING OF GOVERNMENT PARASTATALS

(A CASE STUDY OF POWER HOLDINGS PLC)

By

UGWU SCHOLARSTICA NKECHI

Presented To

Department of Accountancy

ABSTRACT

There are always different kinds of goods and services available to the economic units in every economic system which are categorized into private and solid goods.

Private goods are those goods which companies and individual produce and supply for the consumption of people while social goods by their nature in meeting the welfare needs of the economics units are those goods that are produced and supplied by government, social goods or services which the sole responsibility of government to provide include electricity, water, roads, education communication media etc in the various government parastatals and ministries. This study is purely on the provision of electricity to the citizenry to note that government parastatals are solely owned and funded by government further smooth operations. Inefficiency in the performance of government parastatals has been attributed to inadequate financing and poor management of the fund by government. As a result government, government parastatals such as NEPA, NITEL have gone commercial in their operations while others have become privatized.

The main thrust of this study is to research into the financing of National Electric Power Authority (NEPA) being the only generator and supply of electricity in Nigeria as a government parastatal with a view to evaluating its performance based on statutory financial provisions.

TABLE OF CONTENTS

Title page

Approval page

Dedication

Acknowledgement

Abstract

Table of contents

CHAPTER ONE

1.0 Introduction

1.1 Background of the information

1.2 Statement of the problem

1.3 Objectives of the study

1.4 Research questions

1.5 Hypothesis

1.6 Scope, limitation and delimitations of the study

1.7 Chapter arrangement

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 State involvement in economic activities

2.2 Characteristics of public finance

2.3 Problems of financial management in Nigeria public enterprises

2.4 Financing government parastatals

2.5 Objectives and functions of NEPA

2.6 Analysis of the activities of NEPA since its establishment

2.7 Power generation

2.8 Transmission and transformation

2.9 Distribution

CHAPTER THREE

3.0 Research design and methodology

3.1 Area of study

3.2 Population of study

3.3 Sampling methodology

3.4 Sources of data collection

(I) Primary sources

(II) Secondary sources

3.5 Location of data

3.6 Treatment of data

3.7 Methods of data analysis

CHAPTER FOUR

4.0 Research findings

4.1 Sources of fund available in government parastatals and adequacy

4.2 Policies that guide the employment and training of government

4.3 Various devices used by government to monitor the activities and measures of punishment

4.4 Effective and efficient government decision making policy

CHAPTER FIVE

5.0 Summary, recommendation and conclusion

5.1 Summary

5.2 Recommendations

5.3 Conclusion

Bibliography

Questionnaire

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND INFORMATION

It is an acknowledged fact that in a developing economy, government is always seen as the prime mover of the economy and this situation will remain so far a very long time to come in developing countries. According to Jaivaharial Wehru of India, the trend of events is to make the state more and more the organizer of constructive industry and not the private capitalist or any other person.

The services provided by public utilities are essential for economic growth and development.

It is obvious that no government can progress very fast without the requisite "social overhead" so called by economic growth theorists.

Basically, the three types of social overhead capital necessary for economic growth which are of great interest to this writer are:

(a) Effective transportation

(b) Flexible and reliable power source

(c) Good communication

These three types of social over head capital are necessary conditions for economic growth the type of economic system not withstanding.

Utility services are just as important in socialist system as in capitalist state. They are mandatory for a developed nation, under developed nation or emerging or developing nation and equally essential for a geographical region, state or city.

The third factor which is mandatory for economic growth and development is the flexible and power source. Every economic production depends solely on reliable power and unless this is available, it is impossible to plan and execute production and marketing process. It is also important for the power sources to be flexible. It is only possible to change the production process in response to market forces when energy can be added to or subtracted from as needed and flexibility of power may also be used in free production from a fixed location.

Flexibility makes it possible for market demand to utilize competing sources of supply and to be from location factors.

Without flexibility, mass production of products in factories would not be possible and there would be no need for dichotomy between industrial and non-industrial countries of the world. Without electricity man would be in darkness total darkness, incontinent darkness.

It therefore goes without saying that in every country, there is a body charged with the responsibility of generating and distributing energy electricity. In Nigeria, the body charged with the sole responsibility of generating and supplying or distributing electricity to the consumers is the National Electric Power Authority (NEPA).

NEPA has in recent times meant so many things to different people in Nigeria. To some it connotes all elements of negativism while to others at connotes a stinking some that requires urgent surgical operation to enable it survive.

With all these negative attributes to NEPA, whose fault is it? Is it NEPA's fault or that of society? Or could there be something latent about NEPA's incessant failures that earned it the name "Never Expect Power Always"?

These are questions that cry for answer and unless their answers are provided, this research work may not be complete.

1.2 STATEMENT OF THE PROBLEM

Many factors contribute to the problems militating against government parastatals one of the major factors militating against government parastatals is mismanagement of subventions from government by the managers of such government parastatals. Most of the managers in government parastatal are employed or appointed based purely on political consideration and on potential and capability. For instance a person that has no knowledge of management might be appointed to manage government parastatal because of political alignment and what do you expect him to do, non performance and abysmal failure. Another factor is that attitude of government officials towards government work. Some government officials in the parastatals see government work as an opportunity to cut the national cake and thereby fraudulently enrich themselves to the detriment of the parastatals.

Again, the rigidity of the policies of government parastatals reduces their level of efficiency and effectiveness and creates room for bureaucracy, nepotism, bribery and corruption among the workers of government parastatals.

The above factors no doubt lead to problem of inefficiency in the management of government parastatals.

1.3 OBJECTIVES OF THE STUDY

The author has designed this research work with the following objectives in mind:

(i) To study and analyze the various sources and nature of finance available to NEPA as a government parastatals.

(ii) Analyze the factors that enhance or inhibit the spread of NEPA services throughout Nigeria including rural areas.

(iii) To find out the reasons for lack of devotion and commitment to wards work by staff

(iv) To find out the reasons for poor response of consumers in paying their electricity bill.

1.4 RESEARCH QUESTION

a. What are the various sources of fund available in the parastatals and his adequacy?

b. What policies guide the employment of staff training and orientation in government parastatals?

c. What are the various devices used by government parastatals to monitor the activities of their staff and the measure of punishment meant to them?

d. Are the staff of parastatals given enough incentives to motivate them for maximum output?

e. How efficient and effective are government parastatals in decision and policy functions?

1.5 HYPOTHESIS

Ho: The financing of government parastatal has led to the effective and efficiency in the employment of staff.

Hi: The financing of government parastatal has not led to the effective and efficiency in the employment of staff.

Ho: The financing of government parastatal has reduced the burden of work on the individual workers.

Hi: The financing of government parastatal has not reduced the burden of work on the individual workers

1.6 LIMITATIONS AND DELIMITATIONS

It was a very difficult task to gather the materials sued for this research work. It took extra effort to source both primary and secondary source of material relevant to this research work. As can be seen, most of the material were got from secondary data consisting mainly of materials from NEPA's publications, textbook, and magazine while primary sources was based on oral interviews.

1.7 CHAPTER ORGANISATION

This research work has been arranged unite and organized into five chapters for ease of reference. Chapter one introduces the reader to what the research work is all about with subdivisions as follows:

Problems identification, statement of the objectives of the paper, formulated hypothesis of the study and limitations and delimitations.