What can Nigeria learn from the previous mistakes in electricity Research Paper

What can Nigeria learn from the previous mistakes in electricity liberalisation - Research Paper Example The industrial policy decisions and public finances, the physical characteristics of supply, the magnitude of capital requirement and size of industry, and the complex and close relationships between the industry and other significant economic elements all combine to impose challenges to the liberalization process. During electricity industry the liberalization in Brazil, Argentina, and Peru, various mistakes occurred, though these industries are the road to set successful models. Currently, Nigeria is liberalizing her energy industry, and may draw upon the earlier flaws of these models to fortify the sector. This paper seeks to present a discussion on the fundamental mistakes and discuss the way forward for Nigeria. Privatization is a term that evokes sharp political reactions. The concept covers a great range of policies and ideas, varying from reasonableness to impractical. Despite the variation and the somewhat unclear meaning, privatization has unequivocal political objectives and origins. Proposals for privatization not only return the service to the original private sphere but also seek to create new types of market relations and assure results superior or comparable public programs. In essence, privatization refers to the transfer of government assets or services to the private sector. The state may sell some of its assets to private investors, or alternatively lift statutory restrictions on competition between publicly and privately owned enterprises. Furthermore, by the state may be contract out services that it initially provided. The primary objective of privatization is to increase government efficiency1. Nonetheless, implementation of this concept may result in either negative or po sitive effects on government’s revenue. Essentially, privatization is the opposite of nationalization. Reasons for Privatization In general, privatization of the electricity industry in Nigeria was a result of the desire to increase efficiency and competitiveness, as well as the belief that the market place powers can achieve this more efficiently and effectively than state control. Nonetheless, given the previous history of government participation in services and goods production in Nigeria, and the prevalent history of crisis in these public enterprises, the process of privatization in Nigeria has various expected objectives. First, privatization is a way to inject market discipline to the board members, as the board must reflect the interests of shareholders, primarily the private sector investors whose interest lie with profit maximization. Second, the process results