1.1BACKGROUND OF THE STUDY
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.p.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.
1.2 PROBLEM STATEMENT
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.
1.3 PURPOSE OF THE 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...