PROBLEMS OF DEBT RECOVERY IN PUBLIC ENTERPRISES
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY:
Virtually, every business has a credit relationship with a financial institution, especially banks. Some rely on periodic short term loans to finance temporary working capital needs. Others primarily use long-term loans to finance capital expenditure, new acquisitions or permanent increases in capital. Regardless of the type of loan, all credit request mandate a systematic analysis of the borrower‟s ability to repay as at when due.
Commercial banks carry on ordinary banking business with the general public, changing cash for bank deposits and bank deposits for cash, transferring bank deposit from one corporation to another, giving bank deposit in exchange of bills of exchange, providing of trustees and executor‟s services, providing safe custody of funds and valuables as well as foreign exchange remittance.
Though commercial banks differs from country to country, their profit and banking motives are the same. Their activities are of interest to their customers, workers (staff), and above all, shareholders. The commercial objective of the bank is to maximize profit, though other social and economic functions tends to deflect banks from profit maximization.
The aims and objectives of commercial banks have therefore paved way for their customers to make and obtain credits, in form of loan of which the researcher is interested in.
Lending has become a vital function on operation because of its direct effect and impact on economic growth and business development.
In a market oriented economy, there are two main participants that move the economic growth; these are the suppliers of invisible funds and the users of the funds for productive purposes. These two participants are spread widely in the economy and may not have direct relationship with each other. For this, there is the need to have an intermediary to link them up. The banking sector mobilize surplus funds from small and big savers who have no immediate need for such funds. The users of these funds are the business entrepreneurs and investors who have brilliant ideas on how to create additional wealth in the economy but lack the necessary capital to execute their ideas. These groups of people approach banks to obtain loan.
SUBSEQUENTLY, LENDING IS A RISKY VENTURE WHICH BANKS ONLY ENGAGE ON AFTER A RIGOROUS AND SATISFACTORY ANALYSIS OF THE PROJECT FOR WHICH LENDING IS BEING MADE. THE MAIN PREOCCUPATION OF BANKS IS EXTENDING LOANS TO THEIR CUSTOMERS. THUS, THE FORMULATION AND IMPLEMENTATION OF SUCH LENDING POLICIES ARE SOME OF THE IMPORTANT RESPONSIBILITIES OF THE MANAGEMENT OF THE BANK. THE LENDING POLICY OF A BANK MUST BE SPECIFIC ON HOW MUCH LOAN WILL BE MADE AVAILABLE TO WHOM, WHAT PERIOD AND FOR WHAT REASON. FOR THIS REASON, LENDING POLICIES SHOULD BE WELL DOCUMENTED SO THAT LENDING OFFICERS WILL BE ABLE TO KNOW THE AREAS OF PROHIBITION AND THE AREA OF WHERE THEY CAN OPERATE. ALSO, SUCH POLICIES SHOULD BE SUBJECTED TO PERIODIC REVIEW TO MAKE THE BANKS KEEP ABREAST WITH THE DYNAMIC AND INNOVATION NATURE OF THE ECONOMY AS WELL AS COMPETING WITH OTHER CHANGING ECONOMIC SECTOR.
1.2 RATIONALE OF STUDY
The main reason of this research is to find out the problems of Debt recovery in public Enterprises in Nigeria with special reference to NEPA management that will help item overcome the problem.
1.3 SIGNIFICANCE OF THE STUDY
A lot of money belonging to the Authority has been tied down by various consumers throughout the nation. In view of brokington (2014), we understood that the objective of sales is to make profit in return, but if the services rendered are not paid for, then the business cannot function in another circle. Therefore, identifying the problem of debt recovery through a meaningful research will improve the revenue status and function of the industry and for the nation, a better standard of living.
1.4 BACKGROUND OF THE STUDY
Electricity was said to have started in Lagos in 1886 when two 30-kilowatt generating units were installed to serve the city. As commercial activities increased there were several extension to almost 16 cities and communities Oyeyele (2017( statis;“Around 1944. Lagos city undertaking was operated by the public utility department. But between 1940and 1951 it then come under the Niger man government electrical undertaking. Oyeyele further expressed that, there were other undertaking established and operated by locally constituted supply authority’s within this period. On April Ist, 1951, an ordinance known as Electrical corporation of Niger is (E.C.N) was formed to assume control of the 16 local undertakings then in existence. In 1962, the corporation constructed a 132KVA interconnection from I Jona to Ibadan power station and form Ibadan to Orile and Akure, Benin and Ughelli in the west, Afam and Oji in the East, Kaduna, Aaria and Kano in the North
According to Oyeyele the first Hydro- electrical power station was constructed by private Tin mining interest as (Kwali falls) Kaduna river with a capacity of two megawatts. Another four megawatts was installed by the Nigeria Electricity supply corporation limited at (KURA FALLS) Benin River. A major Hydro-electric feature of about 320 megawatts at 33KV operates from Kanji to Lagos in the West, Kaduna. In the North, Benin in the Midwest and Aba in the East These facilities mentioned above provided a single supple network in Nigeria. But in 1970, the federal Government commissioned shawmout (Canada) under a financial by Canada international Development Agency (CIDA) to study the problems of the power supply Agency and make recommended a new Decree No 24, which created the National Electric Power Authority (NEPA).But the study of Udom revealed that there was a serious manpower problem between NDA and p ower purchased in bulk and sold to the public. Also Abidun (2014). In his opinion confirmed this: But with the amalgamation of the two bodies to form today’s NEPA market the beginning of its crises”
1.5 DEFINITION OF TERMS
Definition of terms is very useful in any research work because it helps to explain the meanings of the various technical terms implied in the study. Itence the following terms are defined.
NEPA: According to Oyeyele (2017) the National Electrical power with the responsibilities and sales of electricity Power Authority is the public Enterprises charged with the responsibilities and sales of electricity supply to consumers.
ELECTRICITY:Electricity is said to the power that is produced by various means carried usually acres that provide heat, light and cold
KILOWATT HOUR:This is defined in Abbot (2010) as the energy supplied by a rate of working of 100watts for an hour.
CABLE:Cable is the length of insulated single or more conductor (s)
ENTERPRISES:Massie (2012) narrowed it to a public or private organisation set up for charity or profit. Normally, public enterprises are capital intensive hence the need for the government to control them.
UTILITIES:There are essential services like NEPA, WATERBOARD, NITEL, AIRWAYS etc. The words utilities and enterprises can be interchanged. In macsran (2017) it was learnt that in developed countries, most of the public utilities are controlled by private investors.
ACCOUNT NUMBER:Account number is the specific number given to a particular consumer for the purpose of accounting.
BILL:A bill is a conditional order written by one person to another, signed by the person concerned requesting the person to whom it is given to pay a certain amount of money at a particular date.
AUTHORITY:The word Authority is used to identify the power centered to NEPA as specified in Decree NO 24 of 1972. The words authority, industry and NEPA will be interchanged in this work project.
MAXIMUM DEMAND CONSUMERS:There are consumers who was the higher limit of electricity supply the industry consumers are also maximum demand consumers in NEPA
PROBLEMS OF DEBT RECOVERY IN PUBLIC ENTERPRISES
