Public Corporations SS2 Government Lesson Note

A public corporation may be defined as a business organization, owned, managed and financed with taxpayers’ money by the government of a country. The aim is not to make a profit but to render essential services to the members of the public. It is established by acts of parliament and they determine their functions.

Public corporations are owned by the government but are managed by boards of directors appointed by the government. Such corporations 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.) etc

FEATURES OF PUBLIC CORPORATION

1. It is wholly owned by the government.
2. Being created by special laws and incorporating them makes it a legal entity.
3. It enjoys a monopoly as it does not compete with another organization in the provision of those essential services.
4. Those who work under public corporations are not civil servants, they are known as contract men.
5. A huge amount of capital is involved in the establishment of public corporations.
6. Profit-making is not the main motive of its establishment but to render essential services to members of the public.
7. It is set up by an act of parliament.

REASONS FOR SETTING UP PUBLIC CORPORATION

1. Because of the huge amount of capital that is involved in the provision of these essential services, the government therefore provides such services at minimum cost to all citizens to enjoy.
2. Public corporations employ people since human labour is required in running various services.
3. Such social services usually involve initial losses and as a result, no private individual will be willing to bear such risk.
4. To avoid duplication of service.
5. To ensure government control of sectors of the economy.
6. To ensure rapid economic development.
7. To ensure a constant and regular supply of those services.

FUNCTIONS OF THE PUBLIC CORPORATION  

1. They provide essential services to the people for instance, transport, electricity etc
2. They are established to employ the people.
3. They prevent the exploitation of the people by a few individuals.
4. They generate revenue for the government.
5. They promote economic development in the country.
6. Public corporations control basic essential industries which are the life wires of the nation, for example, P.H.C.N., N.R.C.
7. They help to raise the standard of living of the people through the regular provision of these services.

ORGANIZATIONAL STRUCTURE OF PUBLIC CORPORATION

The Board of Directors is appointed by the government. There are also managing directors who are also appointed by the government. Others are appointed by the board of directors, and the chairman and the deputy chairman are appointed by the minister concerned. The above-mentioned people get on with the organization of the corporation.

A corporation has the following branches; finance section, sales section, production section, administrative section, and transport and public relations divisions etc, all work towards the ultimate goal of the corporation for which it is set up.

DIFFERENCES BETWEEN PUBLIC CORPORATION AND CIVIL SERVICE

1. Government ministries render services without profit motive, while a public corporation is established to provide services.
2. A public corporation is managed by members of the board of directors, while the civil service is managed by a minister advised by the Director General (Permanent Secretary).
3. The political head of a public corporation is the chairman, while the political head of a ministry is a minister.
4. Those who work in public corporations are called public servants while those who work in civil service are known as civil servants.
5. The administrative head of a public corporation is the General Manager, while that of the civil service is known as the Director General or permanent secretary.
6. Public corporations are set up to provide essential services like water, and electricity for the comfort of the people, while government ministries are set up to formulate and execute government policies.
7. A public corporation makes decisions quicker than a ministry.
8. Public corporations can still perform without the annual budgetary allocation, while government ministries fully depend on the annual budgetary allocation to perform.
9. Workers in public corporations enjoy better conditions of service, while workers in government ministries do not enjoy many conditions of service.

CONTROL OF PUBLIC CORPORATION

The public corporation can be controlled in the following ways;

1. Legislative Control: Public corporations are set up through acts of parliament. The legislature can control them in the following ways;

• The laws stipulated in their acts.
• Auditing their accounts.
•  Summoning their officials to explain any act not understood.
• Budget allocation and approval.

2. Ministerial control: This is done by :

• Appointment and dissolution of the board of directors if they are not performing.
• Approval of loans and expenditures.
•  Auditing of accounts
• Issuing directives.

3. Judicial Control: The court can declare the activities of any public corporations illegal if they go contrary to the laws establishing them.
4. Financial Control: Senior officials of the corporation can be made to appear before the legislature to explain their budget. Also, annual reports of public corporations are presented to the legislature for verification.
5. Public Control: Members of the public who consume goods and services of public corporations exercise some