A FINANCIAL APPRAISAL OF THE OPERATIONAL PERFORMANCE OF PRIVATIZED NIGERIA COMPANY (A CASE STUDY OF NATIONAL OIL PLC, LAGOS STATE)

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A FINANCIAL APPRAISAL OF THE OPERATIONAL PERFORMANCE OF PRIVATIZED NIGERIA COMPANY (A CASE STUDY OF NATIONAL OIL PLC, LAGOS STATE)

ABSTRACT

The topic for this project is A financial Appraisal of the operational performance of privatized Nigeria company. The research study is done in order to get possible solution or recommendation to the problem of the company and to make the staff to be efficient and effective.

Privatization can be defined basically as the process of transferring the ownership of a public enterprise to the private sector. The method adopted in this paper work was purely primary sources i.e from the field an secondary sources i.e magazine, journal e.t.c. The ratio shall be used as a benchmark for evaluating the performance of the company while the data can be analyzed into two and these are pre-privatization and post privatization.

In this respect, my aspiration to go into this research work is the modern techniques of finance mobilization, privatization has grown to attain much popularly as it is how being embraced by many developed countries and developing countries.

TABLE OF CONTENT

TITLE PAGE PAGES

CERTIFICATION I

DEDICATION II

ACKNOWLEDGEMENT III

ABSTRACT V

TABLE OF CONTENT VI

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY 1

1.2 STATEMENT OF THE PROBLEM 4

1.3 SIGNIFICANCE OF THE STUDY 7

1.4 AIMS AND OBJECTIVES OF THE STUDY 7

1.5 SCOPE AND LIMITATION OF THE STUDY 8

1.6 RESEARCH METHODOLOGY 9

1.7 ORGANIZATION OF THE STUDY 10

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1 LITERATURE REVIEW 12

2.1.1 MEANING OF PRIVATIZATION 13

2.2 PRIVATIZATION IN NIGERIA 16

2.3 THE PRIVATIZATION PROGRAMME 18

2.4 PRIVATIZATION AND LIBERALIZATION 20

2.5 HISTORICAL BACKGROUND AND REGULATORY FRAMEWORK OF PRIVATIZATION IN NIGERIA 24

2.6 THE PRIVATIZATION PROCESS 25

2.7 ESTABLISHMENT OF AN APPROPRIATE LEGAL AND REGULATORY FRAMEWORK 31

2.7.1 INSTITUTIONAL ARRANGEMENT 31

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION 45

3.2 DATA COLLECTION METHOD 45

CHAPTER FOUR

4.0 PRESENTATION ANALYSIS AND INTERPRETATION VIA STATISTICAL AND ALLIED TECHNIQUES 49

4.1 ANALYSIS OF PRE-PRIVATIZATION AND POST PRIVATIZATION OPERATIONAL PERFORMANCE OF SELECTED COMPANIES 50

4.2 ANALYSIS OF RATIO MEAN VALUE 51

4.3.1 TAX FOR THREE COMPANIES 53

4.3.2 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN DIVIDED 54

4.3.3 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN RETURN ON CAPITAL EMPLOYED 55

4.3.4 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN SHAREHOLDER’S FUND GROWTH 56

4.3.5 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN EARNINGS PER SHARE 57

4.3.6 POST-PRIVATIZATION AND PRE-PRIVATIZATION MEAN DIVIDEND FOR SHARE AFTER TAX 58

CHAPTER FIVE

SUMMARY CONCLUSION AND RECOMMENDATION

5.1 SUMMARY 59

5.2 CONCLUSION 60

5.3 RECOMMENDATION 62

BIBLIOGRAPHY

CHAPTER ONE

BACKGROUND OF THE STUDY

Privation is basically the process of transferring the ownership of a public enterprise to the private sector. This can be said to be injection of private resources in order words, capital and man power (in the aspect of more qualitative management ) into public sector activities. In Nigeria, privation has led to the transfer of ownership of government establishment to the private sector

With the advent of the modern techniques of finance mobilization, privation has grown to attain much popularity as it is now being embraced by many countries both developed and developing countries which Nigeria happen to be part of them.

The need for an efficient mechanism finds mobilization need to deregulate the economy and a quest for the elimination of include political interference in the economy amongst other reason have led to recent international appeal for privation by many government.

This wide spread acceptance of privation could be accounted for by various factors these includes:

The failure of government to run their parastals efficiently and effectively due to prevalent factor like bureaucracy. These have hundred their responsiveness to government public policy: hence they have constituted a drain on the nation economics

The minimization of excesses of political interference and non-market oriented decision making

The need to restructure internal policy due to an international economic demand for deregulation, instance of this is the international monetary funds (IMF) demand for deregulation of some third world economic s as a condition for granting loan facilities to them

Privatization has proven to be a channel through which domestic and international investment get into and perhaps stay with in the country’s economy. Also fund tied down in state owned establishment. Also fund tied down in state owned establishment can be released and redirected towards more welfare oriented program like heath are delivery, funding of education national security e.t.c.

However, in the case of Nigeria and some developing countries privatization is taking a slow pace and this can be blamed on previous bad government greed on the part of policy makers, minimal awareness of the gains of privation on the part of the majority of the populace amongst other reasons.

Privatization has been adopted as a key mechanism for deregulation policy in developing counties like Nigeria is that of accelerated domestic participation in economic activities that will enhance economic independence.

The history of privation in Nigeria and it’s implication for economic independence of the private sector owned no part of establishment, but the government and foreigners own them.

Although, the whole process was not know as privatization then it was all the same as an attempt to transfer ownership of enterprise in Nigeria to the private sector. It was further modified in 1977.

Under the indigenization exercise, the government still retained its hold on many enterprise from the global perspective, the growth in the popularity of privatization then, especially in industrial nations like Britain etc. can partly be traced to the economic development of the mid 70’s because it was used as a very vibrant tool to salvage the economy from the repercussion of the failure of the widely expanded public sector activities (Ekpentony 1992 ). then, privatization brought a kind of relief by providing market system, which is being required to achieve some necessary macro economics adjustments. Countries that found themselves in this situation include Pakistan and Brazil

STATEMENT OF THE PROBLEM

In privatized companies, it is strongly believed that with very sound policies, their implementation and monitoring will bring about a lot of gains both structural and financial, and the economy of large especially in the area of deregulation that will be enhanced by qualitative backward and forward linkages.

There is no organization without it’s own share of problem. The success of any organization depends on it’s ability to make a good programme and excite it. For example of privatized companies have good plans and could not execute

Them for the following reasons

Ability to finance :- some privatized companies find it difficult to fiancé programme that will bring success to their bring success to their out put either caused by the ignorance by the decision makers.

Practice competence :- some may be ready to finance, but the technical hands, they have on the floor of the organization may able to meet the requirement

Management consistency:- this also may pull back the hand of the organization clock as in accounting data on the determination of business efficiency

Excessive urge for profit:- this means the organization interest in making more of profit them it’s reasonable, there by having an adverse effect on the quality of it’s form the global perspective, the growth in the popularity of privatization them, especially in industrial nations like Britain e.t.c can partly be traced to the economic development of the mid 70’s because it was used as a very vibrant tool to salvage the economy from the repercussion of the failure of the widely expanded public sector activities (Ekpentony 1992) then, privatization brought a kind of relief by providing to achieve some necessary macro economic adjustments. Counties that fund them selves in this situation include Pakistan and brazil.

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