Public Corporation | Meaning, Features, Organizational Structure & Control Mechanisms

Government-Owned Corporations A government-owned corporation is characterized as a business entity funded, operated, and owned by the government, utilizing taxpayer funds. The primary objective is not profit generation but the provision of essential services to the public. These entities are established through parliamentary acts, which outline their functions.   While government-owned corporations are owned by […]

Government-Owned Corporations

A government-owned corporation is characterized as a business entity funded, operated, and owned by the government, utilizing taxpayer funds. The primary objective is not profit generation but the provision of essential services to the public. These entities are established through parliamentary acts, which outline their functions.

 

While government-owned corporations are owned by the government, their management is entrusted to boards of directors appointed by the government. Notable examples include the National Port Authority (N.P.A.), Nigeria National Petroleum Corporation (N.N.P.C.), Power Holding Company of Nigeria (P.H.C.N.), among others.

 

Key Features Of Government-Owned Corporations

  1. Complete government ownership.
  2. Legal entity status due to special incorporation laws.
  3. Monopoly in providing essential services, eliminating competition.
  4. Personnel are contract workers, not civil servants.
  5. Substantial capital investment during establishment.
  6. Primary focus on service provision rather than profit.
  7. Establishment mandated by an act of parliament.

 

Rationale For Establishing Government-Owned Corporations

  1. Facilitation of cost-effective provision of essential services, given the substantial capital involved.
  2. Creation of employment opportunities, requiring human labor for various services.
  3. Undertaking social services with initial losses, which private individuals may be unwilling to bear.
  4. Prevention of service duplication.
  5. Ensuring government control in key economic sectors.
  6. Contributing to rapid economic development.
  7. Ensuring a consistent and regular supply of essential services.

 

Functions Of Government-Owned Corporations

  1. Provision of essential services like transportation and electricity.
  2. Employment generation.
  3. Prevention of exploitation by a few individuals.
  4. Revenue generation for the government.
  5. Promotion of economic development.
  6. Control of vital industries crucial to the nation’s well-being.
  7. Enhancement of the standard of living through regular service provision.

 

Organizational Structure Of Government-Owned Corporations

The government appoints the Board of Directors, managing directors, chairman, and deputy chairman. Various divisions, such as finance, sales, production, administration, and transport and public relations, contribute to the overall goals of the corporation.

 

Distinctions Between Government-Owned Corporations And Civil Service

  1. Government ministries provide services without a profit motive, while government-owned corporations are established to provide services.
  2. Government-owned corporations are managed by boards of directors, while the civil service is managed by a minister advised by the Director General (Permanent Secretary).
  3. The political head of a government-owned corporation is the chairman, while in a ministry, it is a minister.
  4. Employees in government-owned corporations are termed public servants, whereas those in the civil service are known as civil servants.
  5. The administrative head of a government-owned corporation is the General Manager, while in the civil service, it is the Director General or permanent secretary.
  6. Government-owned corporations are set up for essential services, while ministries are established for policy formulation and execution.
  7. Government-owned corporations make decisions more promptly than ministries.
  8. Government-owned corporations can function without annual budgetary allocations, unlike ministries that depend on such allocations.
  9. Workers in government-owned corporations enjoy better conditions of service than those in government ministries.

 

Control Mechanisms For Government-Owned Corporations

  1. Legislative Control: Governed by acts of parliament, which include laws, auditing of accounts, summoning officials for explanations, and budgetary approval.
  2. Ministerial Control: Involves the appointment and dissolution of boards, approval of loans and expenditures, auditing of accounts, and issuing directives.
  3. Judicial Control: Courts can declare activities illegal if they violate established laws.
  4. Financial Control: Involves senior officials appearing before the legislature to explain budgets, with annual reports subject to legislative verification.
  5. Public Control: Members of the public exert control through criticism and feedback on goods and services provided by government-owned corporations.

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