ABSTRACT
This study investigates the contributions and challenges
of Public-Private Partnership (PPP) in the public sector, focusing on its
implications for the Nigerian economy, particularly within the context of the
privatized Power Holding Company of Nigeria (PHCN), now known as Enugu
Electricity Distribution Company (EEDC). Employing a survey research design,
data was collected from 105 employees across seven departments of EEDC in
Umuahia North LGA of Abia State, who transferred from PHCN.
Through the utilization of both primary and secondary data
sources, primarily via questionnaires, this research aims to provide insights
into the extent to which PPP has impacted the Nigerian economy, with a specific
focus on the electricity sector. The study employs descriptive techniques such
as simple percentages and cumulative percentages, alongside analytical tools
including ordinary simple regression analysis using E-view 10.0, to examine the
relationship between PPP and various economic indicators.
The findings of this study shed light on the multifaceted
contributions of PPP to the Nigerian economy. It reveals how PPP initiatives
have facilitated infrastructure development, improved service delivery, and
enhanced operational efficiency within the electricity sector. Furthermore, the
research identifies key challenges associated with PPP implementation, such as
regulatory bottlenecks, funding constraints, and institutional capacity gaps,
which pose significant barriers to maximizing the potential benefits of such
partnerships.
The study underscores the importance of PPP as a
strategic mechanism for addressing infrastructure deficits and promoting
sustainable economic growth in Nigeria. By leveraging private sector expertise
and resources, PPP initiatives have the potential to drive innovation, attract
investment, and stimulate job creation, thereby contributing to overall
economic development and poverty alleviation efforts.
Moreover, the research provides valuable insights for
policymakers, stakeholders, and practitioners involved in the design,
implementation, and evaluation of PPP projects in Nigeria. It offers
recommendations for enhancing the effectiveness and sustainability of PPP
initiatives, including strengthening regulatory frameworks, promoting
transparency and accountability, and fostering partnerships based on mutual
trust and shared objectives.
In conclusion, this study contributes
to the existing body of knowledge on PPP and its impact on the Nigerian
economy, particularly within the electricity sector. By highlighting both the
opportunities and challenges associated with PPP, it seeks to inform
evidence-based policy decisions and facilitate informed discourse on the role
of public-private collaboration in driving socio-economic development in
Nigeria.
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Limitation of the Study
1.9 Definition of Terms
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework
2.1.1 Nigerian Economy in
Perspective
2.1.2 Public-Private Partnership Concept
2.1.3 Public Private Partnership (PPP) Models
2.1.4 The Need for Public Private
Partnership for Economic Development
2.1.5 Benefits of Public Private Partnership:
2.1.6 Public
Private Partnership: The Journey So Far
2.1.7 PPP at the State Level
2.1.8 Prospects and Challenges
of PPP in Nigeria
2.2 Theoretical Framework
2.2.1 Harrod-Domar Model
2.2.2 The Linear-Stages of Growth Model
2.2.3 Neo-Marxist Theory
2.2.4 The Neoclassical Theory
2.3 Empirical Review
CHAPTER THREE
METHODOLOGY
3.1 Research Design
3.3 Population
of the Study
3.4.2 Sampling
Technique
3.5 Sources
of Data Collection
3.5.1 Primary
Sources
3.5.2 Secondary
Sources
3.6 Data
Collection Instruments
3.7 Validity of the Instrument
3.7.1 Reliability of Instrument
3.8 Data Analysis Technique
3.7.1 Reliability of Instrument
CHAPTER FOUR
PRESENTATION AND
ANALYSIS OF DATA
4.1 Presentation
of Data
4.1 Data
Presentation
4.2.1 Empirical Results
4.3 Test
of Hypotheses
4.3.1. Hypothesis One
4.4. Discussion of Findings
CHAPTER
5
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1
Summary of Findings
5.2
Conclusion
5.3 Recommendations
References
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Public private Partnership is a
contractual arrangement which is formed between public and private sector
partners which involve the private sector in the development, financing,
ownership, and or operation of a public facility or service. In such a
partnership, public and private resources are pooled and responsibilities
divided so that the partner’s efforts are complementary. The private sector
partner usually makes a substantial cash or equity investment in the project
and the public sector gains access to new revenue or service delivery capacity,
and this arrangement between the public and private sector differ from service
contracting.
Public Private Partnerships relate to
practices affecting public private sector relationships in ensuring
national/global health, development and well-being of the society, and the
conceptual aspects of such relationships, including the role of the key players
in collaborating to make these partnerships successful.
Though no single, universally accepted
definition for public private partnerships, Public Private Partnership are
often termed to mean different things to different people, which can make
assessing and comparing international experience in such partnerships
difficult. In general, Public Private Partnership refers to form of cooperation
between public authorities and the private sector to finance, construct,
renovate, manage, operate or maintain an infrastructure or service. At their
core, all Public Private Partnership involves some form of risk sharing between
the public and private sector to provide the infrastructure or service. The
allocation of sizable and, at times significant, elements of risk to the
private partner is essential in distinguishing a Public Private Partnership
from the more traditional public sector model of public service delivery. There
are two basic forms of Public Private Partnership: contractual and
institutional. Although institutional Public Private Partnership have been
quite successful in some circumstances, particularly in countries with
well-developed institutional and regulatory capacities, contractual Public
Private Partnership are significantly more common, especially in developing
economies.
Although there is no universal
consensus about the definition of public private partnerships, the following
elements typically characterize a Public Private Partnership: The
infrastructure or service is funded, in whole or in part, by the private
partner. Risks are distributed between the public partner and private partner
and are allocated to the party best positioned to manage each individual risk.
Public Private Partnership are complex structures, involving multiple parties
and relatively high transaction costs. Public Private Partnership is a
procurement tool where the focus is payment for the successful delivery of
services (the performance risk is transferred to the private partner).
Public Private Partnership is an
output-/performance-based arrangement as opposed to the traditional input-based
model of public service delivery where the focus is payment for the successful
delivery of services. Public Private Partnership typically involve bundled
services (i.e., design, construction, maintenance and operation) to increase
synergies and discourage low-capital/high operating-cost proposals. In general,
Public Private Partnership offer a new and dynamic approach to managing risk in
the delivery of infrastructure and services. Although Public Private
Partnership is considered a new concept that has gained prominence in the last
20 years, Public Private Partnership have actually been around for hundreds of
years, wherever the private sector has been involved in the delivery of
traditional public services (i.e., water, roads, rail and electricity).
In Public
Private Partnership arrangements, the private partner is typically compensated
through either: User-based payments (i.e., toll roads, airport or port charges)
Availability payments from the public authority [i.e., Private Finance
Initiatives, Power Purchase Agreements (PPA), Water Purchase Agreements (WPA)]
A combination of the above in user-based payment structures, the government or
public authority often needs to provide some financial support to the project
to mitigate specific risks, such as demand risk, or to ensure that full cost
recovery is compatible with affordability criteria and the public’s ability to
pay. Government support mechanisms can take many forms, such as contributions,
investments, guarantees and subsidies, but they should be carefully designed
and implemented to allow for optimal risk allocation between the public and
private sectors. When government supports are present, the objective is to
increase private capital mobilization per unit of public sector contribution.
Availability payments are at the heart of one form of Public Private
Partnership, the Private Finance Initiatives model. This system provides
capital assets for the provision of public services. Developed in the U.K.,
this model is used for a large number of infrastructure projects and gives the
private sector strong incentives to deliver infrastructure and services on time
and within budget. Private Finance Initiative’s simultaneously allow
governments and public authorities to spread the cost of public infrastructure
projects over several decades. This creates greater budget certainty, while
also liberating scarce public resources for other social priorities.
Government Support Mechanisms hosting
governments can provide financial support to or reduce the financial risk of a
project in many ways. Common forms of government support mechanisms include
Cash subsidy. The government or public authority agrees to provide a cash
subsidy to a project. It can be a total lump sum or a fixed amount on a per
unit basis, and payments can be made either in installments or all at once.
Payment guarantee: The government agrees to fulfill the obligations of a
purchaser (typically a publicly owned enterprise) with respect to the private
entity in the case of non-performance by the purchaser. The most common example
of this is when a government guarantees the fixed payment of an off-take
agreement (e.g., Power Purchase Agreements or Water Purchase Agreements) between
a private entity and the publicly owned enterprise.
Debt guarantee: The government secures a
private entity’s borrowings by guaranteeing repayment to creditors in case of
default.
Revenue guarantee: The government sets a
minimum variable income for the private partner typically this income is from
customer user fees. This form of guarantee is most common in roads with minimum
traffic or revenue set by a government.
The evolutionary process of
infrastructure development in most developing countries is often characterized
by full Government ownership of entities engaged in the provision of services
such as water, electricity, telecommunications, power, and transport. Most of
these services have cost structures which inherently makes them naturally monopolies,
the provision of these services has usually been subjected to inefficiencies.
These services are usually viewed as entitlements necessary for survival,
governments have intervened in their markets from time to time, subjecting
these services to moderate, to severe price distortions, with such conditions
persisting for long periods of time. Unfortunately, postponing compensating
adjustments in the pricing or rationing of these services to avoid political
and popular upheaval has usually come at the expense of state-run utilities and
firms. When uncompetitive conditions are allowed to persist for long periods of
time, the cost to the present and future generations of potentially bailing out
the ailing firms constitutes a significant overhang on the national government,
which may eventually have to be passed onto taxpayers anyway, and may even
undermine efforts at genuine sartorial reforms.
Countries wishing to avoid the
increasing fiscal strain of continued Public sector provision of infrastructure
services are increasingly turning to several modes of privatization, in order
to pass on the challenges of infrastructure services provision to parties in
better positions to assume the risks involved. Aside, from the desire to cut
actual and potential fiscal costs encouraging private sector participation in
infrastructure development has been driven in other countries by rapid economic
growth, sometimes outpacing the Government’s capability to provide services
exclusively and efficiently. Bureaucratic system and inefficient structures are
increasingly being phased out in favor of private operation, ownership or which
is perceived to be more efficient. There is a widespread move towards a shift
to Public Private Partnership this is driven by successful private participations
in Telecommunications, Banking and Waste Management Services where private
provisions have increased access and led to quality services. Beginning with
the privatization program made in Nigeria in the 1980s and momentum gained
since 1999 when the present democratic phase commenced, the trend is to allow
private sector to provide infrastructure. This move is not peculiar to the
federal government alone but other tiers of government as well. Most state and
local government have established Public Private Partnership units in their
area of jurisdiction. Nigeria’s policy
on Public Private Partnership is to the effect that it will develop regulatory
and monitoring institutions so that the private sector can play a greater role
in the provision of infrastructure, whilst ministries and other public
authorities will focus on planning and structuring projects. The private sector
will be contracted to manage some public services, and to design, build,
finance and operate some infrastructure. It is the government’s expectation
that private participation in infrastructure development through Public Private
Partnership will enhance efficiency, broaden access, and improve the quality of
public services. This policy statement sets out the steps that the government
will take to ensure that private investment is used, appropriately to address
the infrastructure deficit and improve public services in a sustainable way;
and it will ensure that the transfer of responsibility to the private sector
follows best international practice and is achieved through open competition
[Foundation for Public Private Partnership Nigeria March 2013].
1.2 STATEMENT OF THE PROBLEM
The constant increase in the need for
public services and infrastructural facilities in Nigeria and several other
countries has given rise to more collaboration between the public and private
sector, this has led to a substantial increase in Public private partnership.
In Nigeria, we have witnessed a lot of
projects and infrastructural facilities that has been initiated and paused or
abandoned by the public sector. In recent times, the delay in the construction
of the Lagos-Ibadan Expressway, Kuto-Bagana Bridge, Lekki-Epe, Kuto-Bagana in
Nasarawa and Kogi States, Maevis concession projects in all International Airports
in Nigeria, the railway system project across the country that was awarded and
abandoned by the Obasanjo administration, the second Niger Bridge between
Onitsha and Asaba and River Niger Bridge in Nupeko, Niger State has been some
of the projects that the public sector have been facing problems completing,
this is primarily due to the reason that the public sector lacks maintenance
culture and other necessary resources and technical know-how to complete the
projects and to conveniently provide and cater for the total needs (public
goods and services) of the citizens of their country alone.Also, poor quality
of leadership is a major factor impeding PPP in Nigeria. The study therefore, seeks
to determine the effect and contributions of Public Private Partnership to
economic growth and development, focusing on Power Holding Company of Nigeria.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine
the contribution of Public Private Partnership on the Nigeria Economy improving
it’s service delivery in Nigeria. The
average Nigerian is suspicious of Public Private Partnership and is usually of
the belief that it is a means of transferring power or control of the nation
among a favored few, they refuse to see and appreciate the burden encountered
by the private sector and public in ensuring the availability of a lasting and
well-functioning infrastructure which can better and faster be achieved through
Public Private Partnership. It is therefore expected that the result of this
study is to enlighten and educate those individual ignorant of what Public
Private Partnership is actually about and its mode of operation.
The Specific objectives of the study are:
i.
To determine the impact of Public Private Partnership (PPP) on economic
growth in Nigeria.
ii.
To examine the impact of Public Private Partnership (PPP) on the
economic development in Nigeria?
1.4 RESEARCH QUESTIONS
i.
What is the impact of Public Private Partnership on Economic growth in
Nigeria?
ii.
What is the impact of Public Private Partnership (PPP) on the economic
development in Nigeria?
1.5 RESEARCH HYPOTHESIS
The following are the research
hypothesis of the study, they are:
H01: Public Private Partnership has no significant effect on economic growth
in Nigeria
H02: There is no significant relationship between public private partnership
(PPP) and economic development in
Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The importance of any research is tied
to proffer solutions to the various problems that face mankind in the
environment or society. This study helps to enlighten the citizens and economic
planners on implication of Public Private Partnership towards the development
of the country as a whole.
The research is also useful for
Government officials and Private Organizations to determine their performance
in accordance with the contractual arrangement between the two parties.
It will also help the researchers and
the upcoming researchers to gain knowledge of the activities of Public Private
Partnership and the Nigerian Experience.
1.7 SCOPE OF THE STUDY
This study is designed to appraise the
impact of the “performance Investigation of Electrical Power Supply to Umuahia
South,Aba North and Isiala Ngwa South for Higher Productivity” This research
was carried out to investigate the performance of Electrical power supply to
Umuahia, Abia State Capital. The researcher limits time-frame of the study to
period of 5 years that is from 2013 to 2018. This period has been chosen
because of the enormous environmental degradation caused by power holding companies
in Nigeria. It was found out that major hindrances to customer satisfaction in
power supply were: inadequate megawatts of power availability. Standard
Organization Nigeria (SON) play a major role to ensure substandard materials
and products are not delivered, from rural cooperative society to create
awareness on how to use light and serve as interface between the company and
community.
Public private partnership can be said
to be a recent development which must be treaded on so softly. Public Private Partnership
being a recent development is thus a delicate area of study, so this research
will carefully examine widely the gains and benefits of Public Private
Partnership.
The center of concentration being the
effects Public Private Partnership will have in a particular locality i.e. its
advantages and disadvantages where it is being practiced and also how it helps
in the provision of needed and necessary infrastructure.
1.8 LIMITATION OF THE STUDY
The study mainly covered just one of
the 36 (Thirty Six) states in the federation which was use to explain and is
expected to be a representation of the 36 states in Nigeria. Another limiting
factor is the time limit available to the researcher within which the research
must be completed. There is also the effect of the prevailing economic
situation which does not spare the researcher.
The researcher ability of the
researcher to complete the research is also limited by insufficient record and
data.
1.9 DEFINATION OF TERMS
Public private partnership: This has been defined as
arrangements between governments and private sector entities for the purpose of
providing public infrastructure, community facilities and related services.
Such partnerships are characterized by the sharing of investment, risk,
responsibility and reward between the partners.
Development: A process of improving by
expanding, enlarging or refining. A process in which something passes by
degrees to a different advance stage.
Economic Growth: Economic Growth is the increase in what a country produces over time.
It’s measured by GDP. It’s driven by the four factors of production. Is the
increase in the inflation-adjusted market value of goods and services produced
by an economy over time.
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