CORRUPTION CHALLENGES AND ECONOMIC GROWTH IN NIGERIA

CORRUPTION CHALLENGES AND ECONOMIC GROWTH IN NIGERIA

The Complete Project Research Material is averagely 52 pages long and is in Ms Word Format, it has 1-5 Chapters. Major Attributes are Abstract, All Chapters, Figures, Appendix, References Level : BTech/BSc/BA/HND/ND

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ABSTRACT

This project work examines the issue of corruption and performance of public corporations in Nigeria, with Power Holding Company of Nigeria (PHCN) as a case-study. The specific objectives of this study include: (i) To determine if corruption in PHCN constitute a major contributory factor which has undermined the effectiveness of PHCN to provided adequate quantity and quality of electricity in Nigeria, and (ii) To ascertain whether or not government regulation and policy on provision of electricity in Nigeria encourages corruption in the electricity sector. The theoretical framework of analysis adopted in this study is the Systems Theory which enables us to analyse PHCN as a system that receives input of demand and support from its environment and produces output in form of delivery of electricity services to its environment. The data for this study were obtained from secondary sources such as text books, journals, official documents, and articles and were analyzed with simple percentage method of analysis. The findings of the study are: (i) Corruption in PHCN does not constitute a major contributory factor to the ineffectiveness and poor performance of PHCN, and (ii) Government regulations and policy on provision of electricity in Nigeria encourages corruption in the electricity sector in Nigeria which undermines the performance of PHCN. Consequently, our recommendations advocate for government to ensure a comprehensive reform of the power sector and application of market principles in the operation of the sector to attract private investments in the sector as well as introduce and enforce policies that will protect the interests of the low income earners and low electricity consumers in the operation of the electricity industry.

Chapter One

Introduction

1.1       Introduction

Electricity has been recognized long ago as very critical to the transformation and achievement of well-being for any society. Consequently, members of every society expect government to develop and enforce policy which will guarantee adequate quantity and quality access to electricity by the members of the society.

The Nigerian State has always, even during colonial era, professed its desire to ensure that inhabitants of Nigeria are provided with electricity for domestic, commercial, and industrial usages. This necessitated the commencement of electricity generation in Nigeria in 1896. The organisation (PHCN) which until 2005 following the enactment of Electric Power Sector Reform Act of 2005, was the only entity legally permitted to generate, transmit and distribute electricity (Federal Ministry of Power and Steel, 2006:6,9), began operation as an Electric Utility Company in Nigeria in 1929 under the name, Nigeria Electricity Supply Company (NESCO), with the construction of hydroelectric power station at Kurra new Jos (www.nigeriafirst.org, 2005: 2), (www.kusamotu.com, n.d.:1).

Subsequently, with the rise in demand for electricity, the Electricity Corporation of Nigeria (ECN) was established in 1951 to replace NESCO. In 1962, the Niger Dams Authority (NDA) was instituted with mandate to develop the hydropower potentials of Nigeria, but in 1972, ECN and NDA were merged to form the National Electric Power Authority (NEPA) through the promulgation of Decree NO 24 of I April, 1972, with power to generate and maintain efficient supply of electricity to every part of Nigeria (www.nigeriafirst.org, 2005: 2), (www.kusamotu.com, n.d.:1).


In pursuance of one of the state economic objectives to manage and operate the major sectors of the economy as contained in Section 16 Subsection 1(c) of the 1999 Constitution, in order to: harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy; control the national economy in such manner as to ;secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity; and to ensure that the material resources of Nigeria are harness and distributed to serve the common good (Section 16 of the 1990 Constitution of Nigeria), NEPA was upheld as the monopoly electricity utility corporation in Nigeria (Section 316 of 1999 Constitution of Nigeria).

It is therefore a constitutional right of Nigerians to expect NEPA to make electricity available to everyone both in urban and rural areas at just and reasonable rates. Unfortunately, despite the fact that Nigeria is endowed with sufficient energy resources to meet its developmental requirements (Federal Ministry of Power and Steel, 2006:4), NEPA has failed to meet this constitutional rights and expectations of Nigerians. According to Rabiu (2009: 15), “it is widely believed that over half of the Nigerian population does not have access to electricity.” Federal Ministry of Power and Steel (2006: 3, 5) avers that rural electricity access in Nigeria is less than 20%, while about 60% of the population – Over 80 million people are not served with electricity.

In spite of the fact that only 40% of Nigerians have accessed to electricity, power supply is terribly erratic that even the small number that has access to electricity cannot enjoy one-day nationwide uninterrupted electric power supply. There is no doubt that the problem of electric power supply has entered a crisis stage. The cheering “NEPA” or “Up NEPA” whenever electric light comes, and the


lamentation and cursing of NEPA whenever light goes off as well as such phrase as

“Crazy NEPA Bills”, and the derogatory re-branding of NEPA as actually standing

for “Never Expect Power Always” are indicative of the level of psychological,

physical and economic trauma inadequate and irregular electricity supply has imposed

on Nigerians. For Boonstra (2009:1), NEPA simply represents spiral of theft and

economic repression. Rabiu (2009:15) avers:

…it is common to find people who spend the equivalent of US$1000 on petroleum per month to generate electricity for their personal use at home. They claim this is not conducive for their respective family members, because it involves storing petroleum and diesel, for the generators at home. They also indicate that they would pay whatever amount to have public or investor-owned electricity transmitted to their homes. A few rural people I discussed this with last April during my visit to Nigeria reported they have had electricity transmitted to their homes for less than two weeks since January 2008. They have been in the dark, perpetually, and when there is electricity supply, it is epileptic and voltage is either too high or too low, sometimes resulting in expensive damages to electrical devices and appliances. They said if they could afford it, they would pay the right amount to have consistent supply of electricity. …Duro Kuteyi said, “I spend an average of N4ooooo (US$33oo) on diesel every month just to remain in business. I still pay my bills in spite of the erratic power supply, and PHCN still disconnects companies.” …Mojisola Abbas, managing director Lydin Pure Water, said “I spend over N120 000 (US$1000) weekly on diesel to meet the demand of customers. It seems the PHCN does not want us to survive.

In the face of obvious retardation of economic growth in Nigeria and the

deprivation of Nigerians the right to healthy living due to ineffectiveness of NEPA to

ensure constant electric power supply, and expression and show of willingness by

Nigerians to pay the right amount for constant electric supply as well as the

government inability to fund and manage the monopolistic electricity utility, and the

lessons drawn from other countries where the private sector drives the electric power

sector, government decided to reform electricity sector in Nigeria with a view to

allowing private investment in the sector.


As a result, a new electricity policy known as National Electric Power Policy (NEPP) of 2001 was introduced. This policy became a precursor of the Electric Power Sector Reform (EPSR) Act of 2005 with most of the significant elements of NEPP (2001) included in the EPSR (2005) (Federal Ministry of Power and Steel, 2006:9).

The signing into law of the Electricity Power Sector Reform Act of 2005 on 11 March 2005 did not only lead to the end of monopoly over generation, transmission, and distribution of electricity, hitherto enjoyed by NEPA, but also led to the replacement of NEPA with Power Holding Company of Nigeria (PHCN) Plc which took over the functions of NEPA and all its assets, liabilities and staff. PHCN is expected by the act which established it to create at least 18 successor companies that would be registered as limited liability companies and subsequently privatised. The intention of this reform is to boost electricity generation, transmission, and distribution in Nigeria.

Nevertheless, electricity supply in Nigeria has deteriorated rather than improve since this reform of power sector commenced. Disillusionment and despair have become the lot of Nigerians over this electric power issue. According to Olori (n.d.: 2), the changes have been cosmetic and blackouts are widespread across the country’s biggest city (Lagos), and the capital, Abuja, yet consumers are plagued with inflated bills, which in local parlance are called “crazy bills.” He maintains, “in fact, according to most consumers, things have only got worse.” Olori (n.d.:2) also quotes a consumer of electricity in Lagos as having averred, “if Power Holding Company gives uninterrupted power for two days, then you are lucky. Power failure under PHCN is more than what it used to be under NEPA. Now it is total darkness. This is affecting everybody’s business.” A quote by Boonstra (2009:1) affirms, “the more the


efforts are that have been made in the power sector, the more troubled things seem to be. The more money is spent on the sector, the more epileptic and unreliable the performance of the sector appears to be.”

Consequently, opinions are awash that corruption is the bane of Power Holding Company of Nigeria’s ineffectiveness in meeting the electricity needs of its numerous residential, commercial, and industrial customers.




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