Control of Public Corporation

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Control of Public Corporation

Public Corporations
Control of Public Corporation

A public corporation is an organization established by an Act of parliament to provide a specific essential service for the public. The law establishing the corporation may charge it with the provision of water electricity, transportation or waste disposal.

Unlike the civil service whose services are normally free, public corporations are required to charge for the services they provide to the public so as to cover their running expenses. The fees charged are usually below the market price of the service.

How Public Corporations Are Controlled

Public corporations are controlled in the same manner as the civil service but the following methods of control are unique to these parastatals.

1 – Ministerial Control

The power exercised by the minister over public corporations is massive and wide. The minister’s powers can be divided into two, namely, statutory and non-statutory powers. Statutory powers are derived from the law setting up the corporation. The law grants the minister power to appoint boards, to give direction to public corporations in the national interest, to approve investment programmes, to control borrowing, education, and training policy, to approve forms of accounts and to control research and development. The non-statutory or extra-statutory power refers to the capacity of a minister to influence the policy, pricing and decision-making of the corporation.

A minister, for example, can influence the appointment of certain management staff though this is primarily a function of the board. There is no limit to these non-statutory or informal powers of the minister.

2 – Legislative Control

Legislative or parliamentary control of public corporations is also important. The aim of legislative control is to ensure accountability and efficiency of public corporations. Public corporations are required by law to submit their annual budgets, accounts and auditor’s reports to the legislature for proper scrutiny and relevant questions are put to the relevant minister for clarification. They are also required to publish their audited accounts in newspapers although this is seldom done.

Since the corporations are created by Acts of Parliament, the legislature can also abolish the corporations where they are not working in the public interest.

3 – Legal Control

As observed above, public corporations are established by law. Consequently, they are expected to act within legal limits. The law creating a corporation usually specifies in detail its name, legal status, structure, programme, functions and sources of income. A corporation is supposed to be guided by these legal rules.

If a corporation does not work within its legal limits, an aggrieved person may seek redress in the court.

4 – Public Opinion

Public opinion also influences the policies and programmes of public corporations. If public opinion is decidedly against the action of a public corporation, it can be forced to change its policy. The decision of the Power Holding Company of Nigeria (PHCN) to increase its tariffs in early 2006 was severely criticized by Nigerians and the corporation therefore had to defer action on the matter perhaps until there is improvement in public electricity supply which, has been epileptic and unreliable. A new of tariffs was introduced from July 2012.

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