CHAPTER ONE
1.0 INTRODUCTION
Price controls are governmental impositions on the prices charged for goods and services in a free market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternately, to insure an income for providers of certain goods. There are two primary forms of price control, a price ceiling, the maximum price that can be charged, and a price floor, the minimum price that can be charged. Historically, price controls have often been imposed as part of a larger incomes policy package also employing wage controls and other regulatory elements. The primary criticism leveled against price controls is that by keeping prices artificially low, demand is increased to the point where supply can not keep up, leading to shortages in the price-controlled product. [1] Shortages, in turn, lead to black markets where prices for the same good exceed those of an uncontrolled market. [1] Furthermore, once controls are removed, prices will immediately be subject to rampant inflation, which can temporarily shock the economic system. Computerized price monitoring and control system is a tool used by the ministry of commerce and industry to track the information of various price of goods monitoring and control. Information technology has brought a lot of changes in the ministry of commerce and industry. Computerized price monitoring and control system is an information tracking program used to keep effective record of all fund allocation and also monitor how those price of goods are been utilized. To appropriate maximum price of goods and supplies possible, for the Ministry’s smooth day-to-day operations in achieving its mandate, while ensuring judicious disbursement and legitimate utilization of duly approved price of goods, in accordance with Public Service Rules, Financial Regulations and extant circulars and also, rendering timely and accurate returns, to the Office of Accountant-General. Price controls provide a company with a level of revenue that is enough to finance an efficient business. This is based on an estimate of the costs companies face in running their business. These include: Operating expenditure – this covers the day-to-day costs of running the network, such as staff costs, repairs and maintenance, overhead costs etc. An allowance is made to cover the amount of operating expenditure which an efficient company would be expected to incur over the price control period Capital expenditure – this covers spending on assets, such as overhead lines, underground cables and other plant. A projection is made of the level of capital expenditure that an efficient company would incur over the price control period. The benefits of capital expenditure are expected to last over several years so companies recover these costs over the assumed life of the asset. Financing costs – this covers the costs an efficient company may be expected to incur in providing a reasonable return to the investors who provide the capital and other financial facilities it requires. Taxation – the price control must provide sufficient cash flow to cover the tax liabilities that an efficient company may be expected to incur, taking into account, for example, the current rate of corporation tax.
