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PROBLEMS OF REVENUE GENERATION IN GOVERNMENT OWNED COMPANIES

ABSTRACT

This research project was embarked upon to study the problems of Revenue Generation in Government owned Companies case study of National Electric Power Authority (NEPA) Enugu district. The meaning of revenue was briefly reviewed. The sources of revenue generation and problem of revenue generation in some of the government owned companies via, NITEL, NIPOST. Nigeria stock exchange and other were highlighted. The research was able to study sources of government revenue like taxes, Tollgates etc. The district groups of people were chosen, customers and staff of NEPA. A sample size of 398 customers and 216 staff were used for the study. Two separated questionnaires were designed for the two separate samples and distributed among them. Interviews were conducted at he offices where the customers queued up to pay their NEPA bills as a first hand source of information. Four research questions were formulated which comprises the inefficiency in Meter reading, the extent of delay in dispatch of bills. Also tested was the extent of vandalization of NEPA facilities as it affects the NEPA organization and the customers in general. Many information got from the customers of NEPA Enugu District is that they do receive crazy bills and the bills are not received at the appropriate time. Also that at times they do stay in blackout for up to one week without light. Information gotten from the staff of NEPA Enugu District is that their greatest enemies are vandals because as a result of that, NEPA spent a huge amount of revenue in restoring these vandalized facilities. Based on these the research made some recommendations on how NEPA can curb these inefficiencies in them and how they can protect their facilities against vandalization.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

According to Anyafo (2000) revenue May be defined either in a broad or a narrow sense. In the broad sense it includes all “in coming or public receipts”. In the narrow sense only those receipts which are included in the ordinary conception of “public revenue”. The chief elements include in the conception of public receipts but excluded from that of “Public revenue”, are receipts from public borrowings and from the sale of public assets such as war. Stores.Furthermore, the Macmillan Dictionary of Modern Economic defines government revenue as all money received other than from issue of debt liquidation of investments and agency and private trust transactions. Government revenue includes tax collections, charges and miscellaneous revenue utility, sale of alcoholic beverages and insurance trust revenue for all funds and agencies of a government.

However, the 1996 constitution states under section 160 (9) that “revenue” means any income or return to return to derived by the government of the federation from any source and includes; 

a. Any receipts however described, arising from the operation of nay law.

b. Any return, however described, arising from or in respect of any property held by the government of the federation.

c. Any return by way of interest on. Loans and dividend in respect of shared or interest held by the government of federation in any company or statutory body. In addition, government owned companies had their different sources of revenue generation, which varies from one company to another. It will be of good interest to know some of these government owned companies which includes:- NIPOST, Federal Airport Authority, NIGER CEM, NNPC, NITEL, NEPA etc.

Nigeria postal service, NIPOST started as the postal branch of the posts and Telecommunication Department in 1851, when it was established in Lagos as an arm of the British post office in 1885 as a link between Lagos and the unites kingdom. Since then till when the postal and Telecommunication Department was later split into in two in 1995. This gave birth to Nigerian Telecommunication limited (NITEL) and Nigerian postal service (NIPOST)
NIPOST became a statutory department in the Ministry of Communication the same year. Within this period, the department was largely a social service oriented organisation. Its service were labour intensive but with low revenue yielding capacity. Then, it was department on government for its funding in other to meet up with its current and capital expenditure. Federal Airport Authority handle Airways activities in the country, Niger CEM owned by the formal eastern Region produces cement sold to the local and national markets.

Nigerian national petroleum company coordinates the activities of petroleum companies in Nigeria, via the production and sale of petroleum products. Also, Nigerian Telecommunication ltd. is a government company that handles telecommunication service in the nations.Then, National Electric Power Authority (NEPA) according to the edicts of NEPA, Electric power Development in Nigerian started towards the closing year of the last century when the first generating plant was installed in the city of Lagos in 1898, from this data onwards and until 1950, the pattern of electricity development was in the form of Individual. Electricity undertaking set-up various towns, some of them by the Federal Government under the jurisdictions of the public works Department and some by the nature Authorities and one or two large municipal Authorities.

In 1950,In order to integrate power development and make it effective, the Government passed the Electricity corporation of Nigeria ordinance N0 15 of 1950. This ordinance brought under one control the electricity undertaking section of the public works department and those undertaking which were under native Authority or municipal ownership and control. The electricity corporation of Nigeria, usually referred to as “E. C. N”, then become the statutory body responsible for generation, transmission, distribution and sale of electricity to all consumers in Nigeria. The Niger Dams Authority was established by an act of parliament in 1962. The Authority was responsible for dams and other works on the River Niger and elsewhere, generating electricity by means of waterpower, improving navigation and promoting fisheries and irrigation.

Construction to the Kanji dam which began in March 1964 was completed on schedule in December, 19968. However, in September 196 in Federal Military Government decided to merge the Electricity corporation of Nigerian and the Niger dam Authority into a single body. A year later, a Canadian firm of consultants, :Shawmort Limited:, was appointed to look into the technical details of the merge. The report was submitted in November 1971. By degree No 24 of 29th June 1972 (which became effective from 1st April 1972) the Electricity corporation in Nigerian (ECN) and the Niger Dams Authority (N.D.A) were merged to become the national electric power (NEPA) the actual merger do not take place until 6th January, 1973 when a general manager was appointed. The Decree stipulated that he Authority is to develop and Maintain an efficient, coordinate and economical system of electricity supply for all parts of the Federation.

The affairs f the Authority is run by a nine member Broad whose members ad Chairman are appointed by the Federal Government through the federal Ministry of Mines and Power. The Board s to lay down the policy of the Authority, and Chief Executive (General manager) sees to it that all decisions of the Board are efficiently executed. The day-to day managing of affairs is in the hands of the General manager. At present his activities are grouped under, six functional divisions each headed by an assistant General Manager namely (Commercial), the Assistant General Manager (Distribution). The Assistant general Manager (Engineering), the Assistance General Manager (Financial) and the Assistant General Manager (Operations). To some people, NEPA appears not so efficient but to others NEPA is most efficient being wholly staffed and run by Nigerians. The aim of this research work is to present NEPA as it really is, to spotlight its efforts and also pinpoint the NEPA’S setbecks.

The Decree which established NEPA in 1972 stipulates that it should develop and Maintain an efficient, Co-ordinate and economical system of electricity after, can one say that NEPA is any nearer that goal than it was then. N Having said that much what, one may ask are NEPA’S plans to me with the increasing demand for electricity ? NEPA’S plan to meet with increase in power demand includes building adequate power generating facilities to meet the recast load demand with reasonable allowance for spare to reserve plant, capacity to permit normal maintenance and forced outage sat each particular period. NEPA also intends to build transmission line capable of supplying the electricity needs to each majority town. The ultimate goal is to extent the transmission network so that if, for one reason or another one of the lines should fail, there would be no interruption of power to the town, concerning thus improving security of supply. On distribution NEPA s presently executing major reinforcements of the facilities in all cities and large urban centres. NEPA intends to keep adequate stock of materials in this increasing number of Area stores to serve all consumers as the need arises. One problems NEPA complians about is the haphazard development of towns because it hampers its efforts.

Haphazard development of towns, it must be emphasized , affects the NEPA’S operations since current plants and projection are nullified in the process as a typical example small industries suddenly spring up in a areas planned as residential and as such, transformers and cables are over loaded till they are damaged because NEPA is not notified when new loads are added to existing ones In other countries, the Electricity Authority is informed about project at the planing stage but in Nigeria NEPA only get to know when projects are about to be commissioned, at which stage, the Authority is expected to perform miracles, NEPA therefore has no choice but to accommodate the resulting increasing in power demand in that area.

The in built reserves in the network is quickly eaten up then and any slighted problem put every body into darkness. Right now, power generation by harnessing water energy, is being developed side by side with that using natural gas. This is in order to remover the over dependence on hydropower since we cannot absolutely control and guarantee the volume of water available year by year. Splition of NEPA, as it is very well known, NEPA was created as a merger of the from electricity corporation of Nigeria (e. C. N), which was mainly responsible for distribution and sales, and the former Niger Dams Authority (N. D. A) created to build and run generating stations, and transmission line. The organizations were merged primarily for the following reasons-:

A. It would result in the wasting of the production and the distribution of electricity power supply throughout the country in one of the organization which will assume responsibility for the financial obligation, and

B. The integration of the ECN and NDA should result in the more effective utilization of the human, financial and other resources available to the electricity supply Industry throughout the country if NEPA is broken up into two or more Companies one of the problems to be faced (at last for now) is manpower shortage since a number of similar organizations. As of now, there is acute shortage of qualified staff for the single organisation. What is not enough now will have to be shared further between two or more completing companies. Besides, the question of electricity tariff between the two to more companies and the general public will have to be effectively harmonized.
Also the question of sharing the assets and liabilities of NEPA will no doubt create problems between the new companies since there are large outstanding debts on assets. Last but not he least, the Federal Government signed on undertaking that NEPA will not be fragmented while sill repaying the loan borrowed from the international Bank for Reconstruction and Development. To any impartial observer, the problems of the power industry today are not so much those of one organisation generating and selling electricity. The problems are more related to the degree of Autonomy has and the financial materials and manpower resources at its disposal.

Manpower shortage of trained manpower is certainty one of the problems of the problems with which NEPA has to contend. As it is generally know, it takes time for a professional Engineer or Technologist to become useful and experienced after his academic qualification. NEPA’S experience has been that it able to recruit staff at the lowest level and put them through training programmes; but by the time they have acquired enough experience to carry responsibilities, they leave NEPA for other more rewarding jobs in the private sector or surprisingly in other attractive parastatal.

1.2 STATEMENT OF PROBLEMS

As there are many sources of revenue generation in NEPA, there are also management problems militating against effective collection and utilization of such resources. The impediments against such resources are:

1. Inefficiency of meter reading

2. Delay in billing.

3. Delay in dispatch of bills.

4. Rampant Vandalisation of NEPA facilities.

1.3 PURPOSE OF THE STUDY

The major purpose of this study is to create an awareness of the problems of revenue generation in NEPA Enugu district and to evaluate such knowledge of great importance in NEPA.

1. to ascertain the extent to which inefficiency of meter reading has affected revenue generation in NEPA.

2. To ascertain the extent to which delay in billing affect revenue generation in NEPA.

3. To ascertain the extent to which delay in dispatch of NEPA bills affect the generation of revenue in the organisation.

4. To find out the extent to which rampant vandalization of operational infrastructure by some miscreants if the society affect the volume of revenue generation in NEPA.

1.4 THE SCOPE OF THE STUDY

This work is limited to national electricity Power authority Enugu district. It concentrates more on financial administration of NEPA as it regards to the problems of Revenue generation in the Organisation.

1.5 RESEARCH QUESTIONS

For the purpose of this work analysis observations and descriptions should be centered on the following questions:

1. To what extent has inefficiency of meter reading affected there volume of revenue generation in NEPA.

2. To what extent has delay in Billing affected revenue generation in.

3. To what extent has delay in dispatch of dispatch of bills affected the generation of revenue in NEPA.

4. To what extent has the rampant vandalization of NEPA operational infrastructure has affected its revenue generation.

1.6 NULL HYPOTHESIS

Ho1: There is no significant difference (P.  05) between the 
man perceptions of revenue accounts department, the extent to which inefficiency in meter reading affected the volume of revenue generation in NEPA.

Hi2: There is no significant difference (P.  05) between the mean perception of the Revenue means perception tot he revenue Accounts department, the extent by which delay in Billing affect revenue generation in NEPA.

Ho3: There is no significant difference (P  05) between the mean perception of the revenue accounts department and the extent by which delay in dispatch of bills affect the generation of revenue in NEPA.

Ho4: There is no significance difference (P  05) between revenue Account department, the extent to which the rampant vandalization affect revenue generation o NEPA.

1.7 SIGNIFICANCE OF THE STUDY

This research work well be of great importance tot he following people as stated below:-

1. Firstly, the result will create serious awareness in the revenue generation department of NEPA.

2. It will serve as a source of information as well as guide to the administrative department of NEPA, Enugu district.

3. It will equally serve as a source of information to several students and practitioners who may embark on a similar or related topic.

4. If strictly applied, consumers of electricity will benefit from not suffering of unusual darkness as a result of vandalization of NEPA’S property.

5. Finally, the suggestions and recommendation contained herein would help immensely in eliminating revenue generation problems if strictly applied on NEPA.

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