THE PRIVATIZATION POLICY IN NIGERIA AN EVALUATION OF ITS IMPLICATION

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The Nigerian National Petroleum corporation and the petroleum ministry appear desperate to maintain their hold on the downstream sector of the oil industry by planning new refineries and voting more money to maintain the existing refineries such as Enugu, Kaduna, Warri and Port-court

The moves have undoubtedly raised doubts about the federal government’s privatization policy and its avowed commitment to the liberalization of the+ oil industry.

According to Austin Oniwon (2006), the NNPC group managing director the corporation is forging ahead with its plans for the construction of Greenfield refineries and petrochemical plants.

According to Okorie .M. (2006:231) privatization can be defined as the selling and transferring of at least part of the state ownership of a corporation to private owners. It can be defined as the process where by the government handover its management or assets of services to private interest.

According to Odike .J. (2002: 263) privatization is a direct obverse of nationalization. It involves the sales of formerly public enterprises to private individuals and groups. Privatization can also be partial (government still retiring some shares in the businesses) or total (ownership is entirely transferred to the private persons who have paid an agreed amount to the government).

In Nigeria, the Decree No. 25 was enacted in July 1988 to set up the privatization and commercialization programmes. As at this year 2006, it has not been possible to carry out a comprehensive privatization of government enterprises.

On 18th, 2002, the Federal Government has suspended its planned privatization of Nigeria National Petroleum Corporation (NNPC) refineries and its subsidiaries until all issues raised by workers in the industry are resolved. A committee headed by employment, labour and productivity, minister Alhaji Musa Gwadabe has been set up to critically examine and resolve all workers concern as well as that of other stakeholders.

The privatization and commercialization Act of 1988, which later set up the technical committee on privatization and commercialization (TCPC) Chaired by Dr. Hamza Zayyad with a mandate to privatize III public enterprises and commercialize 34 others. In 1993, having privatized 88 out of the III enterprises listed in the decree. The TCPC concluded its assignment and submitted a final report which NNPC is inclusive.

Operators in the oil and gas industry has warned that the proposed privatization of the Nigeria National Petroleum Corporation (NNPC) may not succeed unless the federal government put in place necessary measures to ensure that the budgeted plan model does not go the way of Nigerian Telecommunications Company (Nitel). Industry Operators agreed that the privatization of the national oil company is the best thing, that could happen in the sector. They, however, cautioned the government to avoid the mistakes made with Nitels privatization.

1.2 STATEMENT OF THE PROBLEM

The issue of privatization has been a subject of intense global debate in recent years. In Africa, it has remained highly controversial and political risky. Privatization in Nigeria (NNPC) has not been a popular reform. It has received so much criticism from labour, academic and individuals. There have been numerous strikes against proposed sell-offs by unions fearing loss of jobs. While proponents of privatization see that aspect of economic reform as an instrument of efficient resource management for rapid economic development and poverty reduction, the critics argue that privatization inflicts damage on the poor through loss of employment, reduction in income, and reduction access to basic social services or increases in prices. Indeed, despite the fact that privatization has taking place on our oil sector, the economy still softer the above mention problems up to date.

1.3 OBJECTIVES OF THE STUDY

The objectives of the study include the following

1. To determine the contribution of privatization towards the growth and development of NNPC and Nigeria as a whole.

2. To determine/identify major problems associated with privatization of public enterprises using NNPC as a focus study.

4. To itemize solution to problems of privatization of public enterprise with particular reference to NNPC.

6. To make recommendations on privatization policy in Nigeria.

14. RESEARCH QUESTIONS

1. What is the impact of privatization towards national growth and development?

2. What problems are associated with privatization of public enterprise (NNPC).

3. What is the natureof privatization policy on NNPC?

4. What are the implications of the above policy towards their organizational goal attainment?

5. What is the solutions associated with the privatization of NNPC.

1.6 SIGNIFICANCE OF THE STUDY

It is intended that the result of this study will help in the following ways:

1. It will benefit the management to know their operation capacity in the society as well as understanding their major strength and weakness.

2. The federal government will benefit on the ground whether to privatized all the public assets or on a contrary.

3. It will position the management to know the level of customer satisfaction with their view towards privatized product.

4. The reader will also benefit from the work which may serve as reference material.

5. The federal and managerial committee to NNPC will benefit on some essential policy not covered in the course of their policy initiation.

1.7 SCOPE OF THE STUDY

The scope of the study under the privatization policy in Nigeria starting from 2000-2010 will based on Nigeria National Petroleum Corporation (NNPC) as one of Public enterprise in the country will was totally owned by government but due to some set back the federal government see the need to privatized partly o private enterprise whom they think assume they can manage it better.

1.8 DEFINITION OF TERMS

NNPC: Nigerian National Petroleum Corporation

Privatization: Privatization can be defined as the selling and transferring of at least part of the state ownership of a corporate to private owners. Also, it can be defined s the process where by the government handover its management or asset of service to private interest.

Policy: This can be define as a plan of action agreed or chosen by a political party, a business etc over what to be done and means of achieving such plans.