Public Corporations and Parastatals| Jamb Government

Jamb(UTME) Summaries/points on Definition, types, purpose and functions of public corporation and parastatals

Public Corporations and Parastatals

1. Public corporations and parastatals are government-owned enterprises established to provide essential services.
2. They operate under the supervision of specific government ministries or regulatory bodies.
3. These entities may have statutory autonomy but are funded or owned by the government.
4. Public corporations provide goods or services that are too essential or unprofitable for private investors.
5. Examples in Nigeria include NEPA (now PHCN), NNPC, Nigerian Ports Authority, and Nigerian Railway Corporation.
6. Parastatals are often established by Acts of Parliament or enabling laws.
7. They may serve economic, social, or regulatory functions.
8. Public corporations were especially important in post-independence economic development plans.
9. They are part of the public sector but often operate under private-sector-like frameworks.
10. Over time, inefficiencies led to reforms like privatization and commercialization.
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Definition of Public Corporation

11. A public corporation is a government-established organization that operates independently to provide specific goods or services.
12. It is created by law with legal personality and financial autonomy.
13. Public corporations are funded wholly or partly by the government.
14. They aim to serve public interest rather than profit maximization.
15. They differ from regular civil service departments by having managerial independence.
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Types of Public Corporations

16. Service-oriented corporations: e.g., Power Holding Company of Nigeria (PHCN), which provides electricity.
17. Regulatory corporations: e.g., National Broadcasting Commission (NBC) to regulate broadcasting.
18. Commercial corporations: e.g., Nigerian Ports Authority (NPA), operating in revenue-generating sectors.
19. Social service corporations: e.g., National Primary Health Care Development Agency (NPHCDA).
20. Development corporations: e.g., Niger Delta Development Commission (NDDC), for regional development.
21. Financial corporations: e.g., Bank of Industry (BOI), which provides loans and funding.
22. Transportation-related corporations: e.g., Nigerian Railway Corporation.
23. Education and training corporations: e.g., National Open University of Nigeria (NOUN).
24. Communication and media corporations: e.g., Nigerian Television Authority (NTA).
25. Agricultural corporations: e.g., Nigerian Agricultural Insurance Corporation (NAIC).
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Purpose of Public Corporations

26. To provide essential services that private enterprises may avoid due to low profitability.
27. To ensure equitable access to basic amenities such as water, electricity, and transportation.
28. To promote economic development, especially in key sectors.
29. To generate employment opportunities for the populace.
30. To protect national interests in strategic industries like oil and gas.
31. To regulate sectors where public interest and safety must be protected.
32. To stimulate industrial and rural development.
33. To maintain government presence in critical areas of the economy.
34. To ensure stable pricing and supply of essential commodities.
35. To help achieve social equity and justice through accessible services.
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Functions of Public Corporations

36. Delivering goods and services efficiently and affordably.
37. Implementing government policies and development plans.
38. Managing natural resources and infrastructure.
39. Promoting research and innovation in key sectors.
40. Supporting industrial growth through subsidized services.
41. Generating revenue for government through commercial activities.
42. Facilitating import and export operations in areas like shipping and logistics.
43. Providing training and capacity development in specialized fields.
44. Ensuring compliance with standards and regulations.
45. Contributing to rural integration and community development.
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Finance of Public Corporations

46. Funded primarily through annual government budgetary allocations.
47. Revenue from services rendered or goods sold also contributes.
48. Some receive grants or subsidies for capital projects.
49. They may generate income from licenses, fees, or fines.
50. Some corporations access loans from financial institutions.
51. Donor agencies and international partnerships also offer financial support.
52. Their financial operations are subject to audit and legislative oversight.
53. Internal revenue may be used for maintenance and expansion.
54. Financial mismanagement is a recurring problem in many corporations.
55. Funding gaps often lead to inefficiencies and service disruption.
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Control of Public Corporations

56. Controlled by government ministries and boards of directors.
57. Subject to parliamentary oversight, including budget scrutiny.
58. The Auditor-General checks financial records and performance.
59. The Public Accounts Committee of the legislature investigates mismanagement.
60. The President or Governor appoints board members and managing directors.
61. The Fiscal Responsibility Act guides financial operations.
62. Internal control units are established to track performance.
63. External audits are conducted regularly.
64. Ministerial supervision ensures alignment with national goals.
65. Performance is evaluated through key performance indicators (KPIs) and service metrics.
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Problems of Public Corporations

66. Corruption and embezzlement by officials hinder performance.
67. Bureaucratic bottlenecks delay decisions and implementation.
68. Political interference undermines efficiency.
69. Overstaffing and redundancy reduce productivity.
70. Low revenue generation makes many dependent on government funding.
71. Poor customer service and low accountability affect public trust.
72. Mismanagement of funds leads to waste.
73. Lack of innovation and competition causes stagnation.
74. Inadequate infrastructure and tools hamper operations.
75. Many operate at a loss, posing a burden on national budgets.
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Deregulation

76. Deregulation refers to the removal of government control over certain sectors.
77. It allows market forces to determine prices and operations.
78. Commonly applied in petroleum, telecoms, and power sectors.
79. Aimed at encouraging competition and efficiency.
80. Often leads to price fluctuations due to reduced subsidies.
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Privatization

81. Privatization involves the transfer of ownership and management of public enterprises to private individuals or firms.
82. It is aimed at reducing government expenditure and boosting efficiency.
83. Privatized companies are expected to operate profitably and independently.
84. Nigeria privatized NEPA, NITEL, and several steel companies.
85. Privatization can take the form of full sale, partial sale, or public-private partnerships (PPPs).
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Commercialization

86. Commercialization means restructuring public enterprises to operate profitably like private businesses, without changing ownership.
87. It aims to make corporations self-financing and revenue-generating.
88. Commercialized entities retain public ownership but are profit-oriented.
89. Examples include NTA and Nigerian Railway Corporation.
90. The goal is to reduce dependence on public funding while maintaining public interest.
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Objectives of Privatization and Commercialization

91. To improve efficiency and productivity in service delivery.
92. To reduce the financial burden on the government.
93. To attract private sector investment and expertise.
94. To promote competition and innovation.
95. To generate revenue through the sale of government assets.
96. To ensure better customer satisfaction and responsiveness.
97. To eliminate waste and corruption in public corporations.
98. To stimulate economic growth and job creation.
99. To transfer risk and responsibility to private operators.
100. To reorient public enterprises toward market-based principles.
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Features of Privatization and Commercialization

101. Involves policy reforms and legal backing.
102. Driven by the National Council on Privatization (NCP) and Bureau of Public Enterprises (BPE).
103. Focuses on core and non-core public enterprises.
104. Utilizes transparent bidding and valuation processes.
105. May include foreign or local investors.
106. Often carried out in phases or sectors.
107. May involve asset stripping or restructuring.
108. Emphasizes corporate governance and accountability.
109. Seeks to ensure broad-based ownership through public shares.
110. Ensures private management while maintaining public interest safeguards.
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Merits of Privatization and Commercialization

111. Improves efficiency and service delivery.
112. Attracts private capital and expertise.
113. Promotes technological innovation.
114. Reduces government borrowing and expenditure.
115. Encourages market competition.
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Demerits of Privatization and Commercialization

116. Can lead to job losses due to downsizing.
117. Risks monopoly pricing if not properly regulated.
118. May cause inequitable access to essential services.
119. Often lacks transparency and fairness in execution.
120. Can result in the loss of national control over strategic industries.
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Jamb(UTME) Summaries/points identifying the processes involved in privatization and commercialization

I. Processes Involved in Privatization

1. Privatization begins with policy formulation by the government.
2. A legal and regulatory framework is established to guide the process.
3. The government identifies public enterprises suitable for privatization.
4. Enterprises are categorized into core and non-core sectors.
5. The Bureau of Public Enterprises (BPE) oversees the privatization process in Nigeria.
6. A privatization plan is developed and approved by the National Council on Privatization (NCP).
7. The government conducts a valuation of assets to determine enterprise worth.
8. Independent financial and legal advisors are engaged to ensure transparency.
9. Privatization may be conducted through public offers, private placements, or direct sales.
10. Shares are sometimes offered to the general public or institutional investors.
11. Pre-qualification of bidders is conducted to ensure capable buyers.
12. Interested investors submit bids or expressions of interest (EOI).
13. A technical and financial evaluation of bids is conducted.
14. Successful bidders are announced publicly.
15. The government signs a share purchase agreement with the new owners.
16. Proceeds from the sale are remitted to the federal account or reinvested.
17. Post-sale monitoring is done to ensure compliance with agreed terms.
18. The process includes labor negotiations to address job losses or transfers.
19. Privatized enterprises are expected to adopt corporate governance standards.
20. Performance audits may be conducted periodically after privatization.
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II. Processes Involved in Commercialization

21. The government first determines which public enterprises will be commercialized.
22. Commercialization is usually based on recommendations from expert panels or reform agencies.
23. Enterprises are categorized into partial or full commercialization.
24. A clear policy directive is issued outlining the scope of commercialization.
25. The enterprise is expected to operate profitably and self-sufficiently.
26. Management is given greater autonomy and flexibility.
27. The government may inject capital or restructure debts to prepare the enterprise.
28. A Board of Directors is appointed to guide decision-making.
29. New performance targets are set to measure operational success.
30. Government subsidies are reduced or eliminated.
31. Emphasis is placed on cost recovery and market-driven pricing.
32. Workers are trained and reoriented towards efficiency and customer service.
33. Enterprises retain public ownership but must generate their own revenue.
34. Commercialized firms may still receive government support for strategic reasons.
35. Regular audits are carried out to evaluate profitability and efficiency.
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III. Operations of Public Corporations and Parastatals

36. Public corporations operate as semi-autonomous entities created by law.
37. They are tasked with delivering critical services and infrastructure.
38. They function under the supervision of relevant ministries or agencies.
39. Each corporation is governed by a board and a managing director.
40. Their operations are guided by enabling Acts or charters.
41. They may operate in monopolistic or competitive environments.
42. Public corporations handle sectors like transport, power, water, education, and health.
43. Funding comes from government subventions, internally generated revenue (IGR), and donor support.
44. Some corporations charge fees or tariffs for services rendered.
45. They are expected to meet service delivery benchmarks and KPIs.
46. They engage in project execution, asset management, and policy implementation.
47. Procurement and hiring in public corporations follow public sector regulations.
48. Oversight is done by legislative committees, the Auditor-General, and the Public Accounts Committee.
49. Operations are sometimes hindered by bureaucracy and delayed funding.
50. Many suffer from inadequate infrastructure and poor maintenance culture.
51. Staff are recruited through civil service procedures or specialized channels.
52. Their financial statements are submitted for external audit annually.
53. Many parastatals suffer from political interference in operations.
54. Innovations and reforms are often slowed by lack of autonomy.
55. Despite challenges, they remain important tools for national development.
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IV. Economic Importance of Privatization and Commercialization

56. They help in reducing the financial burden on government.
57. Privatization attracts private investment and foreign direct investment (FDI).
58. Commercialization boosts operational efficiency and cost recovery.
59. Privatization enhances competition in formerly monopolized sectors.
60. It encourages innovation and better service delivery.
61. Commercialization helps public enterprises become self-reliant.
62. Privatization can lead to asset reallocation to more productive sectors.
63. Reformed enterprises contribute to economic growth and GDP.
64. They create opportunities for job creation in support industries.
65. Privatized firms pay taxes and dividends, boosting government revenue.
66. They reduce waste and promote corporate governance practices.
67. Privatization improves the availability and quality of essential services.
68. Commercialized enterprises promote entrepreneurial culture within public sectors.
69. The reforms reduce political patronage and inefficiencies.
70. They stimulate the emergence of a vibrant private sector-led economy.

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