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PAGE 20
PAGE 24
THE PERSPECTIVE OF POWER
GENERATION AND NATIONAL DEVELOPMENT
VISION 20:2020:
A Journal published
by the Nigerian Institute
of Management (Chartered)
Volume 49: Numbers 3 & 4
JULY - DECEMBER, 2013
THE IMPACT OF THE ENVIRONMENT ON THE
MANAGEMENT OF HUMAN CAPITAL
PAGE 42
MANAGING CHAOS AS DEVELOPMENT
TOWARDS THE APPLICATION OF OPERATIONS
RESEARCH IN MANAGERIAL DECISION MAKING
TOP EXECUTIVE
LEADERSHIP
PROGRAMMES 2014
Date: 19th-23rd October, 2014
DU
BA
I 2014
DUBAI 2014
DUBAIUK
Date: 8th - 12th September, 2014
UNIVERSITY OF
CAMBRIDGE Judge Business School ExecutiveEducation
UK
Date:1st - 5th September, 2014
USA
Date:16th - 21st November, 2014
For more information, please visit www.managementnigeria.org or call 08052597204, 08052597205
Engr. M. K. Sulaiman, FNIM, Registrar/Chief Executive
Nigerian Institute of Management (Chartered)
22, Idowu Taylor Street, Victoria Island, Lagos.
Tel: 08052597204
E-mail: [email protected]
Payment should be made to NIM GTB account 0000863417 (Sort code 058152010 in any of its branches
nationwide. Please scan and send copies of your payment teller to [email protected]
Date: 25th-28th August, 2014
GA
MB
IA 2
01
4
GAMBIA 2014
BANJUL
Please note that we can not guarantee a seat on any of these programmes beyond a month ahead
of the start date of the respective programmes as available spaces are limited.
N900,000
Please CallN1.95 million
300,000
Editor-in-Chief - Prof. Zakari Mohammed, FNIM
Co-ordinating Editor - Alphonsus N. Okere, AMNIM
Members
Dr. Ben Osamuyi Igbinosa, FNIM
Mr. Taofeek O. Shobajo, FNIM
Engr. Akintola Williams, FNIM
Dr. Olugbenga O. Bejide, FNIM
Chief (Dr.) Stephany Udi Ighedosa, FNIM
Dr. S.S. Momodu, FNIM
Mr. Bobola E. Adeniyi, MNIM
Mrs. Flora F. Iyagba, MNIM
Mrs. Chinwe Nwune, MNIM
Mr. M.O. Lakanu, FNIM
Engr. M.K. Sulaiman, FNIM
Mr. Sola Obadimu, MNIM
3 Management in Nigeria
PAGE 20
PAGE 24
PAGE 36
VOLUME 49 : Numbers 3 & 4 JULY - DECEMBER 2013
VISION 20:2020:
MANAGING CHAOS AS DEVELOPMENT
THE IMPACT OF THE ENVIRONMENT
ON THE MANAGEMENT OF HUMAN CAPITAL
RAW MATERIAL MANAGEMENT IN
MANUFACTURING ORGANIZATIONS
TOWARDS THE APPLICATION OF OPERATIONS
RESEARCH IN MANAGERIAL DECISION MAKING
THE PERSPECTIVE OF POWER
GENERATION AND NATIONAL DEVELOPMENT
PAGE 42
From the Editor
One of the major key indices for determining the
overall development of any nation is its
electricity generation and consumption. All
other facets, namely infrastructural, social, economic and
industrial developments are linked to the availability and
utilization of reliable electric power. Nigeria's electricity
demand has continued to increase over
t h e y e a r s . H o w e v e r, t h e p o o r
performance recorded in the power
sector has not only stalled the nation's
development but also impoverished its
citizens. Also, the increasing population
that is not balanced by adequate energy
development programme has become a
major challenge.
It is a well known phenomenon that the
electricity market in Nigeria is facing
myriads of challenges ranging from slow
growth in generation capacity, slow
i m p l e m e n t a t i o n o f t h e m a r ke t
deregulation process, interference by
G o v e r n m e n t , p o w e r l i n e s a n d
equipment vandalization, poor maintenance of existing
facilities and corruption. In an effort to address this state of
affairs, the federal government embarked on an extensive
power reform programmes aimed at ensuring modest but
genuinely realisable improvements in the amount and
quality of electricity supplied to consumers all over the
country. To this end, a realistic, properly considered and
sustainable plan for service delivery in the short and
medium term were outlined. This included the unbundling
of the operations of the Power Holding Company of
Nigeria (PHCN).
Consequently, In 2013, the federal government decided to
hand over the operations of the Power Holding Company
of Nigeria (PHCN) to private operators nationwide. The
citizenry felt that a wind of relief had come their way as this
was seen as the final solution to curb incessant power
supply to millions of household and business concerns as
well as a means to boost the economy, especially through
small and medium scale enterprises (SMEs). But the
reverse seems to be the case on ground as major cities and
businesses still groan under epileptic power supply. A
nat ionwide assessment on the
performance of the new owners shows
that more still need to be done by these
business outfits to satisfy the yearnings
of Nigerians. One of the reasons given
for this is that the private companies
are not generating power, rather, they
a re s imply engaged in power
distribution; and the power they
distribute is the power that is
generated by the government.
Secondly, many of those involved in
the electricity distribution do not have
experience about power. They are
strictly businessmen looking for new
areas of business. You can understand
why we are having the problem for
now; because they are in the area that is supposedly not
their own.
It is obvious that the Federal Government of Nigeria would
not be able to fund such enormous investments in view of
the huge capital expenditures involved in the project.
Hence, it requires involvement of investments from the
private sector. The government therefore needs to provide
the incentives and enabling environment for the private
investors to fully participate in generating the target
40,000 mega watts by the year 2020.
Achieving 40,000 mega watts by the year 2020.
4 Management in Nigeria
OCTOBER - DECEMBER , 2012
A Journal publishedby the Nigerian Institute
of Management (Chartered)
Volume 48: Number 4PAGE 12
EDUCATION AS A TOOL FOR
NATIONAL REORIENTATION,
DEVELOPMENT AND INTEGRATION
5 Management in Nigeria
6 Management in Nigeria
Power is critical to economic growth and development. Adequate provision of power is essential for national
development as it has a great influence on socio- economic activities as well as the living standards of citizens.
Introduction
By Professor Rahamon A. Bello, FAEng
University of Lagos, Nigeria.
THE PERSPECTIVE OF POWER
GENERATION AND NATIONAL DEVELOPMENT
VISION 20:2020:
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
7 Management in Nigeria
Vision 20:2020 recognized that for the Nigerian
economy to become one of the top twenty in the
world, it has to generate and make available to its
citizenry adequate power for economic and social
purposes. The desire of Vision 20:2020 was and is to
increase the power production to meet the demand
progressively; utilizing all forms of available energy
resources in the country.
Most of the power sector infrastructural facilities in
Nigeria were built in the 1970s and 1980s. Due to lack of
maintenance and adequate expansion of the facilities,
the country has had to live with epileptic and limited
availability of electricity supply. In spite of the abundant
energy resources in the country and significant
Government investments in the sector over the last ten
years, electricity supply remains a serious challenge to
Nigeria's socio-economic development.
Currently, less than 50% of the Nigeria's total
population has access to the national grid due to
inadequate transmission and distribution networks.
Also ageing and poorly maintained infrastructure, weak
ion and radial network configuration and overloaded
transformers, result in frequent system collapse, high
transmission and distribution losses and poor voltage
profile.
Figure1 shows a very good correlation between power
consumption in KWH/capita/annum and the GDP in
PPP/capita of a nation, utilizing the data for 134 countries.
A close look at Fig.2 confirms the assertion in Fig 1. The
countries with high GDPs are seen to have higher values of
power production, which definitely translates to higher
level of economic activities.
30000
25000
20000
10000
5000
0
15000
10000 20000 30000 40000
NigeriaGDP (PPP)/capita
kW
h/c
ap
ita
/an
nu
m
0
Figure 1. Electricity consumption and GDP in 134 countries of the world
Given Nigeria's available generation of 5,482MW (2010) and an estimated 150 million population, the 136KWH per
capita estimate is a by smally low when compared to:
South Africa which has 40,000 MW for its 50 million people.
Brazil with 100,000 MW for 192 million people.
The US with 700,000 MW for 308 million people.
Nigeria's per capita consumption is just 7% of Brazil's and 3% of that of South Africa (Fig 2).
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
8 Management in Nigeria
POWER SECTOR IN NIGERIA
Generally, electricity has to be generated by one of so many
modes, transmitted from where it is generated to where it
will be used or consumed and finally distributed to each of
the end-user or consumer. Hence, the usual three broad
segments: Generation, Transmission and Distribution.
Power Generation
This involves generating electricity from any of the
available energy resources. Generally, generating plants
make use of water or steam to turn turbines which rotate
electromagnets that are surrounded by huge coils of wires.
The push is transmitted to electrons and consequently
electricity is produced at voltages varying from 11 KV to
25KV. Transformers are located at the generating plants to
step up the voltage to between 138KV and 700KV for
transmission.
Power Transmission
This is the system for moving high voltage electricity from
source of its generation through interconnected
transmission lines. Should any of the networks of lines fail,
another takes over the load. At various points along the
way, transformers step down the transmission voltage at
substations to voltages below 69KV, which feed into the
distribution system.
Power Distribution
This is the final stage in the delivery of electricity to end
users. The system's network carries electricity from
transmission system and delivers it to consumers. Typically,
it is composed of medium voltage (less than 50KV) power
lines, substations and pole-mounted transformers, low
voltage (less than 1KV) distribution wiring and
sometimes meters used for residential and commercial
occupancies.
136
214
271
710
932
961
1,226
1,420
1,781
2,013
2,474
4,848
5,110
6,234
6,759
8,358
13,636
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000
Nigeria
Cameroon
Ghana
Zambia
Gabon
Zimbabwe
Egypt
Namibia
China
Brazil
Jamaica
South Africa
Trinidad and Tobago
United Kingdom
Israel
Singapore
United States
KWh per capita per annum
Figure 2: Per capita electricity consumption for various countries
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
9 Management in Nigeria
Length of Transmission Lines: Length of Distribution Lines:
Substations:
Substations:
330KV - 4,889.2Km
132KV - 6,319.3Km
33KV - 46,482Km
11KV - 31,785Km
0.415KV - 193,822Km
21 No. 330/132KV - 6,248MVA
108 No. 132/33/11KV - 8,305MVA 1,078 No. 33/11KV - 10,988MVA
41,477 No. (33/0.415KV & 11/0.415KV) - 17,044MVA
TRANSMISSION DISTRIBUTION
Table 1. Nigeria's Electric Power Transmission and Distribution Capacity (2010)
Power Generation in Nigeria
Power Generation Modes.
Nigeria is a country blessed with resources useful for
generating electricity such as coal, natural gas, oil, hydro
and other renewable energy.
Coal
Coal discovery in Nigeria dates back to 1909. Production
rose to a peak of 905,000 tonnes in the 1958/59 with a
contribution of over 70% to commercial energy
consumption in the country. In over 13 States of the
Federation, available data shows that coal of sub-
bituminous grade is available in about 22 coal fields. About
Color Key:
Black: Generation
Blue: Transmission
Green: Distribution Transmission lines
705, 500, 345, 230 and 138kV
Generating Station
Generating
Step Up
Transformer
Substation
Step Down
TransformerSubtransmission
Customer
20kV and 69kV
Secondary Customer
120kV and 240kV
Primary Customer
13kV and 4kV
Transmission Customer
138kV and 230kV
Figure 3: Simplified Electricity Distribution diagram from Generating Station. Transmission elements are shown in
blue while distribution elements are in green.
639 million tones was established while the estimated
quantity are about 2.75 billion tonnes. However, the
discovery of fuel in commercial quantities in 1958 and
conversion of railway engines from coal to diesel led to the
fall of coal in the early sixties. It only contributed about
0.02% to commercial energy consumption in Nigeria in
2001. Nigeria's coal can be utilized for power generation,
where available.
Oil
Oil exploration in Nigeria witnessed steady growth over
the past few years. The nation had a proven reserve of 25
billion barrels of predominantly low sulphur light crude in
1999. This increased effectively to 34 billion barrels in
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
10 Management in Nigeria
Except for the large scale power generation from hydro
resources at Jebba, Kainji and Shiroro which serve as a
major source of electricity, the exploitation and utilization
of the renewable energy resources in the country is very low.
Recent efforts have led to the increasing use of solar energy
resources but others like wind and biomass are currently
limited largely to pilot and demonstration projects.
Hydro
In the case of hydro, currently, there are three main hydro
generating stations in Nigeria namely: Kainji, Shiroro and
Jebba in that order, these are stations that could ensure that
the nation gets a very sizeable supply of electricity without
Large Hydropower 11,250MW
Small Hydropower 735MW
Solar Radiation 23.5 - 7.0 kWh/m -day
Wind 2 4 m/s (annual average) at 10m height
Table 2: Nigeria's Renewable Resource Estimate
Source: Energy Commission of Nigeria; National Energy Masterplan
ENERGY SOURCE CAPACITY
2004 and currently is about 36.5 billion barrels. Nigeria's
capacity was about 2.4 million barrels per day in 2008 and
1.85 million barrels per day averagely in 2012.
Nigeria has four refineries in the downstream oil sub-sector
with a total installed capacity of 445,000 barrels per day and
5001 km network of pipeline to 22 oil depots from the
refineries. Electricity can be produced from oil directly or
from products of the refineries, especially gas oil or diesel
and fuel oils. Vision 2020 is looking at maximizing this
potential for power improvement to meet its goal.
Natural Gas
Nigeria's proven natural gas reserves, estimated at about
187.44 trillion standard cubic feet in 2005, are known to be
substantially larger than its oil resources in energy terms.
Gas discoveries in Nigeria are incidental to oil exploration
and production activities. Consequently, as high as 75% of
the gas produced was being flared in the past.
Natural gas comes either associated with oil or non-
associated. It is the non-associated gas that has largely,
hitherto, been processed for generation and other uses,
instead of flaring. The main gas resources are still largely
untapped.
New and Renewable Energy
Nigeria is endowed with abundant renewable energy
resources, the significant ones being solar energy, biomass,
wind, small and large hydropower with potential for
hydrogen fuel, geothermal and ocean energies. The
estimated capacity of the main renewable energy resources
is given in the Table 2.
interruption if it is properly harnessed. The total installed
capacity of these stations is around 1,900MW. More
importantly, Nigeria has a very big potential to generate
several Mega Watts of electricity from hydro. UNIDO
Centre for Small Hydro put the unexplored potential of the
Nigeria's hydro electric power capacity at about
20000MW.
CURRENT STATUS OF POWER GENERATION
In year 2000, power generation capacity was as low as
1,500MW in Nigeria. This was due mainly to lack of
investment in maintenance and expansion programs on the
existing power plants. Table 3 shows additional electricity
to be generated in view of achieving vision 20:2020.
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
11 Management in Nigeria
With efforts on increasing power generating capacity, there
has been reasonable sectoral improvement as generation
capacity increased to 5482 MW in 2010. However, the
actual daily generation fluctuates between 2000 MW
3700 MW due to inadequate gas supply. Of this power
supply, gas-fired plants contributed about 74% of the
available power. The new power plants significantly added
to available generation capacity. These plants are compact
and flexible in operation with better control and
monitoring devices.
The figures highlighted are however related to the power
generation by PHCN and other identified associates
contributing to the grid. As shown in Fig. 4, a considerable
proportion of electricity is generated by individuals and
corporate bodies to compliment the inefficient services
offered by PHCN. An estimated 6000 MW is generated
via individual and corporate outfits to meet their minimum
demands for electricity.
1,754.7
6,000
794
1,119
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
PHCN
& IPPs Diesel & Petrol
Generators
Megawatts Hydro
AES, AGIP, Shell
Thermal
Figure 4: PHCN Peak Generation Compared with Capacity of Individual Diesel and Petrol Generators (2010)
Kainji
470
100 570
Jebba
482
96.4 578.4
Shiroro
450
150 600
Egbin
1100
220 1320
Sapele 180 90 270
Delta 300 200 500
Afam 52 346 398
Geregu 414 - 414
Papalanto 480 - 480
Omotosho 304 - 304
Station
Available
Capacity
(MW)
Expected
Additions
(MW)
Total (MW)
2012
TOTAL 4232 1202.4 5434.4
Table 3: Expected Additional Generation Capacity
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
12 Management in Nigeria
In spite of the huge and diverse endowed energy resources in
Nigeria, there are only two major resources that are
exploited for electricity generation in Nigeria namely gas
which contributes about 68% on average, and water which
generates about 31% of electricity supply. The national
electricity grid comprises of three (3) hydro, seven (7)
government-owned and three major IPP-owned thermal
plants, with a total available capacity of 5,482MW as at
2010. However, the level of generation fluctuates due
primarily to gas supply constraints. The available capacity is
1 Calabar
562.5
2 Egbema
337.5
3 Ihovbor
450.5
4 Gbarian
225.0
5 Sapele
450.0
6 Omoku
225.0
7 Alaoji 960.0
8 Papalanto 675.0
9 Omotosho 451.0
10 Geregu 434.0
S/N NIPP Total Output
TOTAL 4770.5
Table 4 Capacity Output of the NIPPs
In spite of the huge and diverse
endowed energy resources in
Nigeria, there are only two
major resources that are
exploi ted for e lectr ic i ty
generation in Nigeria namely
gas which contributes about
68% on average, and water
which generates about 31% of
electricity supply.
6,000
35, 000
4,000
25,000
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
PHCH + NIPP in 2011 2020 Target
Megawatts Gas, Transmission & Build Gap
Gas & Transmission Gap
Actual Generation
Maintain?
Construct?
Unconstrain?
Figure 5 gives a pictorial view of actual PHCN generation capacity and associated generation from other sources with
projection to 2020.
inclusive of the power generated by the three major
Independent Power Producers (IPPs). Table 4(b) shows
current capacity output of the NIPP.
There exist virtual independent and potential power
generating facilities at various locations which are unused
and untapped because of absence of synergy between
Ministries of Water Resources, Mines and Steel
Development and Power. Examples are Dadin Kowa Dam
(30MW), Oyan Dam (9MW), ALSON (540MW).
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
13 Management in Nigeria
Figure 6 shows the current electricity generation pattern
by resource. Large hydro accounted for about 31.30% of
electricity generation capacity while natural gas accounted
for 67.5 and the balance of 1.2% through other resources
as at 2005. In a study conducted by A. S. Sambo on
Matching electricity supply with demand in Nigeria
seven different fuel types were considered. These include
natural gas, large hydro, coal, nuclear, small hydro, solar,
and wind. Oil was considered to be very expensive and was
not used in the optimization. The shares of the different
power generation technologies in the total installed
capacity for the Reference Case are shown in Table 5.
Fuel Type 2010 2015 2020 Coal
0.0
9.9
13.8
Gas
78.6
48.5
53.5
Hydro
21.3
18.9
13.6
Nuclear 0.0 9.4 5.3
Solar 0.1 13.1 11.0
Wind 0.0 0.1 2.9
Table 5: Future Installed Electricity Generation Capacity By Fuel (Reference Case), %
Niger ia Power Generat ion by Fuel Type
1 . 2 0 %
3 1 . 2 8 %
6 7 . 5 3 %
C o a l H y d r o O t h e r R e n e w a b l e s N u c l e a r N a t u r a l G a s O i l , D i e s e l
Figure 6: Power generation by type
The share of hydropower (large and small) in the total instal
capacity could decrease from 31.30% in 2005 to about
13.6% in 2020, while the share of natural gas based power
capacity could decrease from 68.30% in 2005 to 78.6% in
2010 and thereafter decrease to 53.5% in 2020. Coal and
nuclear, which are not used for power generation at all at
present could account for 13.8% and 5.3% by 2020,
respectively. Solar and wind are also projected to account for
11.0% and 2.9% respectively by 2020. The High Growth
and Optimistic Scenarios follow similar patterns.
ISSUES AND CHALLENGES
The key challenges facing the Nigerian Power Industry are as
follows;
I. Inadequate power generation capacity
In comparison to other countries, Nigeria's installed
capacity is grossly inadequate. As at 2010, only
about 3,700MW was available for a population of
140million people due to various reasons including:
Gas supply constraints
Inadequate maintenance of equipment that stems
from procurement constraints, dearth of skilled
maintenance personnel and the dependence on
imports of parts and foreign experts to effect
repairs and overhauls.
II. Gas Supply
Considering Nigeria's reliance on gas for the thermal
stations which is currently estimated at about 74%,
Electricity Supply Mix
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
14 Management in Nigeria
Po
wer lo
sses
(% o
f g
en
erati
on
) 50
40
30
20
10
0
1970 1980 1990 2000 2010
Figure-7: Power Losses as a
percentage of Generation
Source: National Energy Data Bank,
www.nationalenergydatabank.org
the frequent gas supply disruptions have been primarily
responsible for power load shedding across the country.
The main reasons for the disruptions were:
Quality of gas which is sometimes delivered
with condensates.
Non implementation of the gas master plan
leading to inadequate gas infrastructure for the
existing power plants
Inappropriate gas and power pricing structure to
support investment in domestic gas supply.
Vandalisation of gas infrastructure
PHCN's recurring debt to NGC
Lack of coordination between agencies of the
Ministries of Power and Petroleum
III. Sector Reform
1. Industry regulation
The National Electricity Regulatory Commission
(NERC), saddled with the responsibility of regulating
the power industry, has to be properly empowered and
enabled to carry out its functions. The independence of
the regulator also needs to be strengthened in order to
give confidence to investors. This needs to be addressed
to create a viable and competitive power sector. The
success of this is what will make or mar the effective
development of the sector.
2. Industry and Market Structure
The implementation of the Electric Power Sector
Reform Policy has introduced a number of new players
in the power industry. NERC has licensed thirty one
(31) companies for generation, transmission and
distribution.
3. Inappropriate Electricity Pricing
Nigerian electricity tariffs have to reflect the costs of
generation, transmission and distribution to ensure
stability and attract investors. Nigerians, who
currently generate supplementary power, pay much
higher prices for electricity. Generation with the use of
diesel, if efficient, is at about N40/KWh, much higher
than what would be paid to a more efficient power
sector.
4. Commercial framework to support private
investments
Although the implementation of the Power Sector
Reform Program is well advanced, the appropriate
commercia l f ramework to support pr ivate
investments needs to be clearly spelt out and the
framework made attractive enough to investors.
In order to proceed with the reform program, it is
necessary to develop a comprehensive action plan to
holistically implement the reform program as
encapsulated in EPSRA 2005.
IV. Transmission
Inadequate Transmission Network
The transmission network is overloaded with a
wheeling capacity which is currently estimated at
5,000 MW. It does not have adequate voltage
profile, dispatch and control infrastructure, grid
network, has frequent system collapse, and
exceedingly high transmission losses. Access to
electricity services is low.
Obsolete and Inefficient Transmission and
Distribution Equipment
Significant portions of the transmission and
distribution network are obsolete, especially in the
major cities. The transmission and distribution
losses (figure 7) are of the order of 40%.
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
15 Management in Nigeria
There is low
human
capacity in
the Industry
and there is
need to
enhance
human
capacity
development
in the
Nigerian
power sector.
In order to
address this
challenge,
the reform
proposed a
National
Power
Training
Institute,
similar to the
Petroleum
Training
Institute
V. Low level of human capacity
development
There is low human capacity in the Industry
and there is need to enhance human capacity
development in the Nigerian power sector.
In order to address this challenge, the reform
proposed a National Power Training
Institute, similar to the Petroleum Training
Institute, which was set up to take over the
operations of the existing training schools of
PHCN. The Institute should be adequately
funded to d i s cha rge i t s manda te .
Development of the specific high-level skill
requirement should immediately commence
so as to be able to meet the needs of the
sector, when fully open to the private sector.
Full advantage should be taken not to repeat
the experience with the oil and gas sector and
ensure the jobs available are taken by
Nigerians.
VI Vandalization of power assets
The incidence of vandalization has
significantly impacted negatively on grid
equipment and capacity development in the
sector at all levels. Vandals target various
equipment from distribution flow voltages
of 415v to 330Kv super grid levels. These
include transmission lines and transformers
at distribution level. Usually these vandals
pilfer the distribution transformers, line
conductors, insulators and other line
equipment that are resold to the grid on the
open market.
OBJECTIVES, STRATEGIES AND
THRUSTS OF VISION 20:2020
The policy thrust of the medium term plan of
vision 20:2020 envisages a power sector that
efficiently delivers sustainable, adequate,
qualitative, reliable and affordable power in a
deregulated market while optimizing the on,
off grid energy mix and a technologically
driven renewable energy sector that
harnesses the nation's resources to
complement its fossil fuel consumption and
guarantee energy security.
The key strategic objectives for the first
medium term Implementation Plan (2000
2013) were as follows:
1. To increase generation, transmission
and distribution capacity for adequate
and su s t a inab l e power supp ly.
Generation of 16,000MW by 2013 was
envisaged.
2. To have an optimal energy mix of Gas
fired plants 12,730MW, Coal 900MW,
Nuclear 0MW, Hydro 2250MW with
other renewable i.e. wind 10MW, Solar
10MW and Biomass that can give a total
of 16,000MW by 2013 - using
appropriate technologies.
3. To encourage local production of inputs
for Power sector development using
local materials.
4. To reduce wastage of electricity by
promoting efficient practices through
introducing demand side management,
publicity, encourage use of energy saving
equipment.
5. To promote effective utilization of coal
to complement the nation's Power needs
and ensure the much-needed Power
generation mix.
6. To harness a significant contribution of
hydropower potential for electricity
generation with the mini and micro
hydropower schemes developed for
electricity extension to rural and
remote areas.
7. To ensure a significant contribution of
the wind energy to electricity generation
mix in the areas feasible.
8. To make effective use of the solar energy
resources for electricity generation,
particularly in the rural and remote
areas.
WAY FORWARD
The first medium term for the vision
20:2020 is virtually over. However, all hope
is not lost with the power sector. Noting the
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
16 Management in Nigeria
socio-political terrain and the usual attitudes towards
government programmes, a lot of progress has been made
in the implementation plan for the power sector. The major
bottleneck has to do with the unbundling of PHCN, which
has taken the whole of the first medium term and all is yet to
be fully achieved. The recent release of funds for the PHCN
pensioners as well as the conclusion of the transfer of some
of the Gencos to the private sector may just set the pace for
an accelerated development in the sector.
Hence, efforts would need to be put at:
(i) Intensifying the Implementation
of the Power Sector Reform Program, i.e.
Improvement of industry regulation with specific
reference to capabil i ty, capacity and the
independence of NERC.
Maintenance of viable electricity and gas pricing
that will encourage and guarantee financial and
capital investment.
Conclusion of the privatization of the PHCN
successor distribution and generation companies.
Feasible incentive scheme backed by policy to
encourage private sector investment in generation
and distribution.
Conclusion of the fate of TCN to be sure of a
robust and operationally efficient transmission
network.
Financing institutional and market systems that
will support power procurement between
generation companies and distribution companies
should be put in place. Empowerment should be
given to the office of the market operator to
commence shadow trading.
(ii) Overhaul and Rehabilitation of Existing Power
Plants
The overhaul and rehabilitation programmes of the
existing thermal and Hydroelectric Power plants
station should be speedily concluded and
privatized accordingly.
(iii) National Integrated Power Projects (NIPP)
The completion of the on-going National
Integrated Power Projects (NIPP) which were
expected to contribute about 4,770.5MW of
electricity to the national grid and increase the
transmission and distribution capacities by
3040MVA at 132/33KV and 5250MVA at
330/132KV and 3540MVA (3009MW)
respectively by December 2011 and much more by
2013 should be hastened.
(iv) Construction of Additional Gas Supply
Infrastructure
In order to realize the power generation target,
urgent need for additional gas resources had been
established and a few projects identified or
earmarked to mitigate the shortfalls. The
completion of those projects and additional ones
would be essential to move near the targets of the
power needs in Vision 20:2020. These include:
D e v e l o p m e n t o f g a s r e s o u r c e s f r o m
Obiafu/Obrikom fields held by Nigerian Agip oil
Company (NAOC)
Construction of a 100km 48 pipeline for gas
evacuation through the East-West inter-connector
gas pipeline from Obiafu/Obrikom in the East to
Oben node in the West is needed to meet the high
demand in majority of the power plants in the
western part of the country.
Phase I project of gas pipeline construction of
about 400Km through Calabar-Umuahia-
Ajaokuta to supply gas to the power plants in the
Eastern part of Nigeria such as Alaoji, Geometric
power plants etc.
OCTOBER -
DECEMBER
, 2012
A Journal p
ublished
by the Nig
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of Manage
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Volume 48:
Number 4
PAGE 12
EDUCATI
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AS A TOO
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Always readManagement in Nigeria Journal
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
17 Management in Nigeria
(v) Upgrading of Facilities at the National Power
Training Institute
The middle level manpower development for the
sector would be largely from the newly established
National Power Training Institute, whose upgrade
should be completed to a world class standard. A
complimentary high-level skill development should
also commence through specialized Masters
degrees in aspects of power generation,
transmission and distribution. These should jointly
be mounted by universities and the power servicing
companies.
(vi) Independent Power Producers (IPP)
Development Program
Nigeria government will have to provide incentives
such as pre-approved permits, tax holidays, off take
guarantees, model form PPAs, GSPAs etc. to
achieve the power generation target needed to
achieve the objectives of Vision 20:2020. As
highlighted in Figure 5, the bulk of the power
generation needed to meet the needs of the vision
will have to be through the IPPs. Hence, a focused
effort to encourage the development of
Independent Power Projects (IPPs) in the country is
essential.
(viii) Utilisation of other Energy Resources for
Adequate Power Mix
In order to enhance energy security and
sustainability through the diversification of
feedstock for power generation, the use of coal and
other renewable energy resources hitherto unused
(wind, solar, biomass) have to be fully deployed in
partnership with the private sector.
(ix) Full Exploitation of the Hydroelectric
Resources in the Country.
Hitherto, hydroelectric power is the second largest
source of power in the nation after the gas-fired
plants. Developments in this area are dual:
(a) Completion of the Zungeru (700MW) and the
Mambilla (2600MW) Hydroelectric Power
Projects which could add a total of 3300MW to the
grid.
(b) The installation of turbines in existing dams to
generate electricity should be a priority since these
facilities are near completion.
CONCLUDING REMARKS
It has been clearly shown that provision of electricity is key
to economic deve lopment as there i s d i rec t
proportionality between power generation in an economy
and its level of development. No nation can thrive and
keep its workforce in jobs without adequate level of power
generation and provision. Entrepreneurship and SME
development can be maximized with adequate power
provision.
The Vision 20:2020 plan, as it relates to power, set out to
articulate the path to achieving adequate power supply for
Nigeria. Its first implementation plan spanning 2010 -
2013 seems to be far behind its target of the provision of
16000MW of power by 2013, albeit with appreciable
power mix. However, the major hurdle to the vision's
realization, which is the full involvement of the private
sector in the generation, transmission and distribution of
power appears to be on course, even though behind in
time frame.
The eventual solution to the Nigerian power problem will
involve the generation of power from resources (coal,
wind, solar, nuclear, biomass, etc) as at where they are
available in the nation and not 100% reliance on
generation from only natural gas and hydro resources.
This will ensure security of supply.
There has to be synergy between Ministry of Power and
that of Petroleum Resources to ensure adequate gas
resources for power generation by the existing plants and
new ones that are bound to come up to meet the demands
of the vision. Key projects like the East West pipeline and
the gas processing plants must be scheduled to meet the
needs of the power agenda. Similarly, synergy must exist
between the Ministry of Power and the Ministry of Water
Resources to harness power from the existing dams in the
nation.
More importantly, the framework for appropriate gas and
electricity pricing as well as power purchase must be
without blemish. The regulator, NERC, must be
independent and be allowed to play its role for a vibrant
power sector which is what could and would drive the
economy to take it to be one of the best twenty (20) in the
world, not far beyond 2020.
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
18 Management in Nigeria
REFERENCES
* Ebewele, J. O. (2011): The challenges of power generation in Nigeria, Paper delivered at the Summit on Energy and sustainable economic
growth.
* Goldwyn,D. (2003): Power sector reform review, World Bank Operations Evaluation Department (OED), [on line]. Available:
http://www.worldbank.org/oed
* Labo,H.S. (2010); Current status and future outlook of the transmission network, investors' forum for the privatization of PHCN successor
companies, [online]. Available: http://www.nercng.org/tcn
* Owonubi,O. U. Equere, A. Adelakun, A. Solanke, T. Oluwakiyesi, A. Idowu and R. Ahmed; 31 (August 2010):.Nigeria-power sector reform
roadmap, Nigeria Vetiva Flashnote, [Online] Available: http://www.proshareng.com/admin/upload/reports/VetivaResearchFlashNote
* Oluseyi,P. O.(2012) "Evaluation of the Roadmap to Power Sector Reforms in a Developing Economy, Proceeding of European Energy
Market (EEM) conference, Florence, Italy, May 10-12, 2012.
th
* Sambo,A. S. (2008):"Matching Electricity Supply with Demand in Nigeria", International Association of Energy Economics, 4 Quarters pp
32-36. [online]. Available: www.iaee.org/en/publications/newsletterdl
* Shettima,A.(2011) Market development in the Nigeria Electricity supply Industry (NESI),. [online]. Available http://www.nercng,org/tcn
* Nigerian Electricity Regulatory Commission(NERC), The Grid Code for Nigerian Electricity Transmission System, The Grid Code version 01,
[on line].Available: http//www.nerc.ng.org/tcn http://en.wikipedia.org/wiki/Electric_power_distribution
NIM VISION: To be the and of Management ExcellenceSOURCE SYMBOL
NIGERIAN INSTITUTE OF MANAGEMENT
(CHARTERED)
The President & Chairman of Council,
DR. NELSON U. O. UWAGA, mni, FNIM, FPSN
on behalf of the Institute, invites you to the
2014 CENTENARY DISTINGUISHED
MANAGEMENT LECTURE
R.S.V.P
Engr. M. K. Sulaiman, FNIM
Registrar/Chief Executive
08037185477
Theme:
holding at the
SHEHU MUSA YAR'ADUA CENTRE , ABUJA
TH
on Thursday, 10 JULY, 2014 at 11.00 am.
RESETTING NIGERIA,
APPLYING TRANSFORMATIONAL
DISCIPLINES
GUEST SPEAKER:
DR. (CHIEF) L. E. A. AIMIUWU, FNIM, CNIM, OON
(The Osayuwanoba of Benin Kingdom)
World renowned transformation strategist and planner
N IMNIGERIAN INSTITUTE
OF MANAGEMENT
(CHARTERED)
Management Excellence Since 1961
VISION 20:2020: THE PERSPECTIVE OF POWER GENERATION AND NATIONAL DEVELOPMENT
19 Management in Nigeria
20 Management in Nigeria
Abstract
The discussed the centrality of management in the evolution of
a livable community, in the organization of states and in the
architecture of national development. In order to drive home
the message on national development, it raised some
fundamental questions such as: Why is our national
development effort since independence unable, till date, to
support a decent life and a promising future? Why are all the
symbols of promised economic growth suddenly stunted and
even in reverse gear? Have we truly given thought and
sufficient reflection to the meaning and scope of development
and management? It called on the NIM to be part of Nigeria's
Management Mix as the best people to lead the nation are the
professional managers.
Introduction
Development is certainly much more than crunching
GDP figures, drilling oil, erecting skyscrapers or even
blindly accepting the western economic theories of
privatization, stabil ization and l iberal ization.
Development is strictly about the transformation of
society. The transformation of society is not just about
slogans, they have to be coded in the values of direction.
Transformation must be about what kind of society we
seek to build, and for what goals and purposes. This is the
only way that transformation acquires its true meaning,
and that is why development experts insist that
transformation is also a process mechanism that affects
not only what we do, but how we do it.
An accurate conception about Nigerian development is
essentially about quality of life issues; issues such as
poverty eradication; peace and security, true and broad
health care and education beyond basic literacy. It is also
about economic security, the creation of safety nets, a
democratic, equitable and sustainable development.
Many Nigerians are frustrated about the failure of
development on our shores. What many have failed to ask
however is how they understand the concepts and the
values that give development its meaning. The Indian
economist and philosopher, Professor Amatya Sen makes
By Mallam Nuhu Ribadu
Principal Partner, Ribadu and Partners, Abuja
MANAGING CHAOS
AS DEVELOPMENT
21 Management in Nigeria
the important point that democratic values,
as much as economic values are critical in an
accurate conception of development.
These key in with the vision of the
American Nobel Prize winner, Joseph
Stieglitz who definitively affirms that
words like openness, partnership and
participation, women empowerment, and
environmental health carry in their innards,
a theory of development, as well as evidence
tha t can l ead to more succes s fu l
development efforts.
Management in Nigeria:
The question is to look down the passage of
time and ask why half a century after
independence Nigeria remains a near
destitute nation. Whichever way it is
viewed, management has received a bloody
nose in the country, and those who insist
that our tribe of managers cannot escape
the humiliation of failing to provide
leadership appear to be right. We need to
just look around ourselves, recall our last
visit to a true factory, take a broad view of
many of our national monuments, even
colleges, health centres, car assembly plants,
steel mills, agricultural projects and the
endless lists of failed national institutions.
Undoubtedly there is a major management
deficit in the land and the result is that the
country is far away from where it ought to
be.
Nigeria's problem is not with its laws. The
amendment to Nigeria's Constitution and
other laws alone would not take the nation
to the desired destination. The problem is
largely that of management. Bad managers
cannot operate the best of laws, the best of
businesses and the best of countries. The
country's management problem did not
begin today. Management is the act of
getting people together to accomplish
desired goals and objectives using available
resources efficiently and effectively.
Flowing from this definition, the questions
are: how efficiently and effectively have the
God-given natural resources been used to
uplift our great country? How well have the
talents and endowments of Nigeria's
human resources been harnessed to put the
country on the path of sustainable
development? How well have we managed
ourselves as a giant in Africa and an
important entity in the comity of nations?
While pondering over the questions and
making deductions, the immense damage
and huge cost that poor leadership and
management have led Nigeria to socio,
political and economic failures should be
visited. These are giant setbacks like more
than three decades of military dictatorship
in Nigeria polity, the brutal civil war, the
phenomenal misuse of huge oil resources,
the incessant ethnic and rel igious
intolerance, the monumental corruption,
the massive brain drain and now the bitter
experience of terrorism on our own
homeland.
Need for New Management Paradigm:
Are our management assumptions really
right? It is said that once the assumptions of
social science are wrong, the analysis is
destined to a fatal failure. The father of
modern management science, Peter
Drucker said, The basic assumptions
underlying much of what is taught and
practised in the name of management are
hopelessly out of date. As a challenge to us
all, we cannot afford not to think of an ideal
management model for ourselves that is in
tune with our country's political, economic,
social and cultural realities. Hence, the task
of the Nigerian Institute of Management.
Martin Meredith, author of the classic
work, The State of Africa, noted aptly that
mismanagement and corruption in our
country is as old as our independence, if not
Why is our
national
development
effort since
independence
unable, till
date, to
support a
decent life and
a promising
future? Why
are all the
symbols of
promised
economic
growth
suddenly
stunted and
even in reverse
gear? Have we
truly given
thought and
sufficient
reflection to
the meaning
and scope of
development
and
management?
MANAGING CHAOS AS DEVELOPMENT
22 Management in Nigeria
older. He asserted that: In Nigeria, the first years of
independence became an orgy of power being turned into
profit. The advantages of political office were used at
every opportunity by Nigerian leaders to accumulate
empires of wealth and patronage with which to improve
both their personal and their party's fortunes. Using
public resources, party and government bosses were able
to reward their supporters and friends with jobs,
contracts, loans, scholarships, public amenities; indeed
any favour that came within their purview.
He added that: Power itself in effect came to rest on the
ability to bribe. Parties, once in power, moved quickly to
amass a fortune from public funds large enough for them
to be able to win the next election; a network of banks,
businesses and financial structures were set up to support
this objective. Parties that did not command state
resources simply stood no chance of winning elections.
Furthermore, he submitted that: Between 1958 and
1962, for example, the Action Group government in
Nigeria's Western Region invested about 6.5million GBP
in the National Investment and Properties Company, a
business which had four party leaders as its directors. In
the period between April 1959 and November 1961, one
of the directors gave 3.7million pounds to the Action
Group in the form of special donations. Northern
politicians ran a similar spoils system. A study of thirty-
nine investment and loan projects of the Northern
Nigeria Development Corporation undertaken in 1966
showed that the biggest borrowers had been the big men
of the Northern government.
From the foregoing, it could be seen in horror that
Nigerian leaders began to mismanage the country right
from day one. The commanding vision of development
was not even part of the bargain. A little comparison of
Nigeria and Tanzania at independence could be made to
underline what good and bad management can do to a
country. Tanzania is younger than Nigeria, becoming
independent a year after in 1961. Zanzibar, its semi-
autonomous region, got independence in 1963. But
because of the quality of their managers, they foresaw
strength in unity and worked extremely hard, in spite of
their religious and cultural differences, to become one
country the United Republic of Tanzania in 1964. The
country grew stronger, more prosperous and ended up
avoiding military coups, civil war and disintegration. It
became the bastion of peace and stability in a very restive
region, even turning out to be saviours to its tumultuous
neighbours.
Tanzania had the same kind of challenges Nigeria had at
independence. But its leaders had better managerial
know-hows. Nigeria is not that lucky with its managers,
and the rest is history. The first wrong steps were taken
and the country is paying dearly for them ever since.
Effects of Mismanagement
The point has been made earlier about how so many years
of mismanagement and inept leadership has led to the
social and political dislocation in the country. If we were
to subject this result to the standards of strict business
judgments, there ought to be consequences for this type
of result. Every manager knows that his or her longevity
at the head of a corporate organization is as certain as the
continued satisfaction of the shareholder to executive
performance.
Apparently, the mismanagement of Nigeria has led to the
extinction of institutions of national significance and
pride such as Nigerian Airways, National Shipping Lines,
Steel Rolling Mills, NITEL, Car Assembly Plants and
even the national soccer team, the Super Eagles, which
used to be the symbol of the nation's collective unity and
pride, that some Nigerians now refer to as Super
Chickens. Poor managers that we are, we have
mismanaged our natural resources, particularly the oil
that is the cash cow of the national economy today, to the
extent that most observers and commentators of the
industry now believe oil is a curse on Nigeria.
The Managers Nigeria Desire
The central challenge is to identify how we all can
effectively respond to our daunting challenge of
management and development. Development will
continue to elude us if we cannot deploy a new generation
of managers that will interpret the challenge of our failure
as the failure of current management practices.
The community must support the ennoblement of man
and its resources. It must be an empowering community
of equality and justice where values of collective and
MANAGING CHAOS AS DEVELOPMENT
23 Management in Nigeria
individual progress are an abiding faith. The manager
Nigeria desires must be one with a national ethos, not a
sectional jingoist, he must be a competent, modern,
honest, God-fearing, compassionate, benevolent,
courageous and firm, confident, articulate, great team
builder. Presumably, the Nigeria Institute of
Management has an unusual ball in its court.
A Managerial Model for Nigeria
Researchers at the Harvard Business School, concerned
at the failure quotient of corporate organizations in the
United States, came up with new markers of
management vision for the new age. They proposed that
the businesses of the future that will endure and last must
be guided by the following principles: Eliminate formal
hierarchies; Reduce fear and increase trust; Exploit
diversity; Expand employee autonomy; Unleash human
imagination; Encourage passion among employees; Use
lofty goals such as truth, love and justice to inspire
employees instead of mundane ones such as
differentiation or focus.
The NIM must challenge the country in the face of the
current climate of failure in many of our institutions with
new values for the future. If we have lost the past decades,
but hope to refocus, it is imperative that new values of
leadership and management should guide our next steps.
The notion that Nigeria's geography, race or culture has
anything to do with its current situation is not tenable.
The examples of Nigeria's neighbours and sister nations
sufficiently suggest that we can and should try harder. We
need to learn some management lessons from some
countries on African continent and then formulate an
ideal management system for the country. A bit of
Tanzania (how to build a nation out of a country), a bit of
Botswana (the sharing of resources accountability and
transparency) and a bit of Rwanda (how quality
leadership pulls a country back from the brink and puts it
on the path of sustainable development with the highest
development indices in Africa. Certainly not to forget
Ghana, Nigeria's cousin in the region, that is showing on
a daily basis that size and wealth have nothing to do with
development and progress.
The Place of NIM In the Nigeria Management Mix
A management revolution is urgent if we are to gain the
decade ahead. Today we are at best managing chaos and
that is not a viable development model. However, it can
also be an opportunity to turn failure to success. If we put
in the will and the determination we shall and can make it.
The history of our nation and of the components of the
larger nation has shown that we have the capacity to pull
back from the brinks and make impressive wins. The
most salutary example is how we managed to rebuild
after a nasty civil war and still kept the faith of a united
nation aglow. This should be the focus of the NIM. It
should inspire Nigerians to know that there is a way out
of our current failings and the alternative in the new
century is that failure cannot be an option. Nations and
societies that cannot put the challenge of development, of
leadership and of management at the front burner, will
atrophy and vegetate. The easy way out is to find a way
out of the endemic corruption that has choked the breath
out of Nigeria's purpose to progress and the best people
to lead the nation in this march are the professional
managers.
We need to just look around
ourselves, recall our last visit
to a true factory, take a broad
view of many of our national
monuments, even colleges,
health centres, car assembly
plants, steel mills, agricultural
projects, and the endless lists
of failed national institutions.
Undoubtedly there is a major
management deficit in the
land, and the result is that the
country is far away from
where it ought to be.
MANAGING CHAOS AS DEVELOPMENT
24 Management in Nigeria
THE IMPACT OF THE ENVIRONMENT ON
THE MANAGEMENT AND PLANNING OF
ABSTRACT
The environment in which an organisation finds itself
considerably dictates the way and manner in which the human
capital of the organisation is planned and managed. The
environment consists of a plethora of forces (environmental
challenges) that exert varying degrees of pressure and influence
on the planning of human capital. The paper investigated the
factors militating against the planning and management of
human capital planning in public organisations. Three
hypotheses were drawn and tested based on the data gathered
through a questionnaire. The survey investigation method was
used in collecting the primary data for the study. The sample
consisted of 349 middle level management staff of five public
sector organisations in Nigeria. The results showed that the
planning and management of organizational people is
significantly influenced by political influences, traditional
rulers and military rulers; globalization, economic meltdown
and technological changes; and the corporate strategic plans
and objectives of the organization. Based on the
aforementioned, the paper concluded that the environments in
which organisations find themselves contain key trends and
forces that have potential impact on the management and
planning of human capital. These factors possess both
opportunities and threats which, if well harnessed and checked,
can be great potential for public sector organisations. The paper
recommended advocacy by Human Capital Planning (HCP)
managers to influence detrimental laws that affect or influence
HCP; training programmes and updates on technological
changes and the need to harmonize HC plans with corporate
strategic plans.
BYBY
Dr. WURIM, BEN PAM Dr. WURIM, BEN PAM
(Assistant Chief Accountant)(Assistant Chief Accountant)
National Directorate of Employment, PlateauState.National Directorate of Employment, PlateauState.
BY
Dr. WURIM, BEN PAM
(Assistant Chief Accountant)
National Directorate of Employment, PlateauState.
HUMANCAPITALHUMANCAPITAL
25 Management in Nigeria
INTRODUCTION
Human capital is a key economic resource which demands
the same attention from its enterprise as planning its
finance, equipment, raw materials, production or services,
sales, investments or profits. Human capital has been
defined as the stock of productive skills and technical
knowledge embodied in labour. In order words, human
capital comprises of expertise, dexterity, talent, craft,
aptitudes and abilities, and understanding. Without
people, organisations cannot exist.This is because it is the
knowledge, skills and abilities of individuals that create
value to the organization (Armstrong, 2003). Davenport
as cited in Armstrong (2003:353), observed that people
possess innate abilities, behaviors and personal energy.
These elements make up the human capital they bring to
their work. It is they, not their employers, who own this
capital and decide when, how and where they will
contribute it.
Human capital represents the human factor in the
organisation; the combined intelligence, skills and
expertise that gives an organisation its distinctive character.
The human element of an organisation are those capable of
learning, changing, innovating and providing the creative
thrust which if properly motivated can ensure the long term
survival of the organisation (Bontis, et al, 1999: 391-402).
In summary, all the workers or employees of an
organisation form the human capital of that organisation.
Human Capital Management (HCM) and Human Capital
Planning (HCP) are two vital activities often associated
with human capital and organizational performance. While
human capital management is a management function
concerned with the recruitment, selection, training and
development of people in an organisation, (Aswathappa,
2005: 6), human capital planning is the process by which a
firm ensures that it has the right numbers and kinds of
people in the right places at the right time, doing things for
which they are economically most useful (Fammularo,
1986:10).
The assumptions underpinning the management and
planning of human capital are that people are the
organisation's key resource, and organizational
performance largely depends on them. Thus, if an
appropriate range of human capital policies and processes
are developed and implemented effectively, human capital
would make a substantial impact on organizational
performance.
Human capital planners and managers in Nigeria grapple
with the tasks of planning and managing the human capital
of organisations in such a way as to increase productivity,
effectiveness and efficiency, and meet production targets.
In spite of efforts put in by such organizational operators,
most organisations suffer from gross mismanagement
which has consequently resulted into inefficiency in the use
of resources, faulty recruitment of employees, inadequate
training, absence or non compliance to replacement
charts/succession plans, massive purges and corruption
which have in turn weakened the ability of organisation to
carry out their functions effectively (World Bank,
1991:23).
Simply asked, why is it that in spite of frantic efforts to plan
and manage the human capital in organisations, the
productivity and performance levels of the workers is still
below expectation. It is well known that no organisation
operates in a vacuum. The environment in which it finds
itself considerably dictates the way and manner in which
the human capital of the organisation is planned and
managed. Environment may be understood as all those
forces which have their bearing on the planning and
management of human capital (Decenzo, et al, 2002: 46).
Analysis of the environment is very important in order to
be proactive. Reactive strategy serves the purpose when the
environment is fairly stable and competition is less severe.
Today's business environment is characterized by change
and intense competition. Hence, proactive steps in the
planning and management of human capital are vital for
any organisation if it has to survive in such an environment.
Human capital represents the
human factor in the organisation;
the combined intelligence, skills
and expertise that gives an
organisation its distinctive
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
26 Management in Nigeria
STATEMENT OF THE PROBLEM
It is a truism that people are the organization's key resource,
and organizational performance largely depends on the
people. However, the realization of a well planned and
managed human capital that ensures maximum
organizational effectiveness and performance depends on
the inter-play of a plethora of forces that exert varying
degrees of pressure and influence on the planning and
management of human capital.
The great pressure exerted by the environment in which an
organization's human capital is planned and managed
appears to be the main bane of its ability to meet target,
datelines and customer demand, the achievement of
teamwork and the employment of the right quality and
quantity of workers. Other attendant problems are low
labour productivity and capacity utilization. These forces
include among other things: global economic meltdown;
logical changes; demographic changes; government/legal
regulations; cultural diversities and trade union interest
and expectations. Others are: globalization; e-commerce;
corporate strategic plans; objectives and policies. Whereas
some of these are clearly observable, others are largely
remote in operation and effect.
What is not yet very clear, however, is whether or not, or
further still, which of these forces, affect the planning and
management of human capital in Nigeria and to what
extent? Further compounding the problem is the apparent
uncertainty as to whether the easily identifiable factors as
opposed to the remote factors are the worst culprits
militating against the planning and management of human
capital in Nigeria.
RESEARCH OBJECTIVES
The major objective of this paper is to generally investigate
the factors militating against the planning and
management of human capital in organisations. The
specific objectives of the study are:
1) To assess the impact of political, traditional and
military leaders influences on human capital planning
and management
2) To ascertain the extent to which globalization,
economic meltdown and technological changes affect
human capital planning and management
3) To assess the impact of corporate strategic plans on
human capital planning and management.
METHODOLOGY
The study was a survey investigation to find out how
certain environmental forces militate against the planning
and management of human capital in five organisations.
The population of the study is made up of 10,127 middle
level management staff presently active in the employment
of the five selected organisations.
Table 1.1 Population of Middle Level Management staff in the Five Selected Organisations
Organisations No of Employees
National Directorate of Employment (NDE)
1,677
Power Holding Company of Nigeria (PHCN)
3,072
Plateau State Water Board (PSWB)
360
Federal Ministry of Finance (FMF)
2,066
Nigerian National Petroleum Corporation (NNPC)
2,952
Total
10,127
Source: Field survey, 2012
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
27 Management in Nigeria
Given that the population of study is finite, the Taro
Yamane (1964) formula was used to arrive at a sample size
of 385. The formula is given as
n = N 2
1+N (e)
Where: n = Sample size; N = Population; e = level of
significance (or limit of tolerable error), in this case, 0.05.
and 1 = Constant value.
The primary data were generated using a Likert Scale (5
Points) structured questionnaire which covered three
management functions and other issues relevant to the
research topic. The questionnaire was administered on the
selected sample (385) through direct distribution. The data
collected through the questionnaire was analyzed using the
Kruskal-Wallis test statistic.
THEORETICAL FRAMEWORK
To actually understand the plethora of forces that exert
pressure and influence on the planning and management of
human capital, an environmental scanning must be carried
out.
Environmental Scanning
In order to identify the key trends and forces in the
environment of an organisation as having a potential
impact on the management and planning of human capital,
an environmental scan must be carried out. This is because
no organisation operates in a vacuum. The environment in
which it finds itself considerably dictates the way and
manner in which its human capital is planned and
managed.
Mathis & Jackson (2000: 38) posited that environmental
scanning is the process of studying the environment of the
organisation to pinpoint opportunities and threats. The
external environment especially affects human capital
planning because each organisation must draw from the
same labour market that supplies all other employers.
Indeed, one measure of organisational effectiveness is the
ability of an organisation to compete for sufficient supply
of human capital with the appropriate capabilities. Mathis
and Jackson suggested the areas to be scanned to include:
Government influence, economic conditions, geographic
and competitive concerns, and workforce changes.
According to Aswathappa (2005:72), environmental
scanning refers to the systematic monitoring of the external
forces influencing the organisation. To him, managers
monitor several forces but the following are pertinent for
human capital planning: economic changes; technological
changes; demographic changes; political and legislative
issues as well as social concerns.
Analysis of External Environment
When carrying out an external scan of an environment for
the purpose of human capital planning, what things should
one look at? According to the Government of
Saskatchewan H R planning guidelines as contained in
Bacal & Associate (2008: 1-2), in order to do human
capital planning you need to have a sense of both the
current external environment, and anticipate things that
may happen in the future in the labour market place. You do
this via an external scan or environmental scan that can
address the following issues and questions:
What is the current external environment? What
elements of the current environment are relevant to the
company? Which are likely to inhibit the company
from reaching its goals?
What are the company's specific issues and the
implications of these issues? What key forces in this
environment need to be addressed and which ones are
less critical?
What is the impact of local trends on the company
(demographic , economic , po l i t i ca l , in ter-
governmental, cultural, technology, etc)?
Are there comparable operations that provide a similar
service? How might that change?
How would that affect the company?
Where does the work of the company come from?
How might that change and how would it affect the
organisation?
It is a truism that people are
the organization's key
resource, and organizational
performance largely depends
on the people.
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
28 Management in Nigeria
How might the external environment differ in the
future? What forces at work might change the external
environment? What implications will this have for the
organisation?
What kinds of trends or forces affect similar work in
other jurisdictions?
What kind of trends or forces affect the company's
partners/stakeholders and customers?
It has been noted that many factors are driving change both
from within and without. A carefully scanned environment
is likely to reveal active forces like government/legal
regulations, economic and technological changes,
globalization, e-commerce, demographic changes, and
union interests and expectations. Others are societal
expectations and corporate objectives and policies.
The Internal Organisational Environment
Human capital planning cannot take place in a vacuum. It is
essential to note that human capital planning is affected by
corporate strategic plans, objectives and policies of an
organisation. Bartholomew & Smith (1970:3), observed
that human capital planning is an essential part of the
overall corporate planning of any organisation and cannot
be successfully developed as a separate or parallel activity.
For one thing, all the components of a corporate plan are of
necessity, related to the organization's mission and
objectives, and all are concerned with the same future
environment, although they focus on different aspects of it.
Incomplete or inconsistent basic assumptions made by
different contributors to a corporate plan are well known
sources of disaster.
Human capital planners must be very conversant with their
corporate plans and objectives, financial conditions and
technology in use or to be used. This is because therein lies
the answers and solutions to some of the basic questions
they (HR planners) face. In scanning the internal
environment of an organisation to detect forces that
influence human capital planning and management, a
number of questions and issues need to be addressed. Bacal
& Associate (2008:6) adapted from the Government of
Saskatchewan (USA) a list of such questions and issues to
be addressed. They include but not restricted to the
following:
What knowledge, skills, abilities and capabilities does
the organisation have?
What is the company's current internal environment?
What elements support the company's strategic
direction? What elements deter the organisation from
reaching its goals?
How has the organisation changed its organisational
structure? How is it likely to change in the future?
How has the organisation changed with respect to the
type and amount of work it does and how is it likely to
change in the future?
How has the organisation changed regarding the use of
technology and how will it change in the future?
How has the company changed with respect to the way
people are recruited?
What is the public's (or customers) perception of the
quality of the organization's products, programmes
and/or services? What is being done well? What can be
done better?
Are current programmes, processes or services
contributing to the achievement of specific
organisational goals?
What are the present and future financial positions
/conditions of the organisation?
Is the technology currently in use cost effective? What
other cost effective technology does the company have
in mind for the future?
Organisational Objectives, Policies andPrinciples
Efficient and effective human capital management is a
challenge to all human capital professionals. Staffing,
training and managing with the aim of increasing
organisational productivity needs proactive strategisation.
Among the core human capital activities are: payroll, time
and labour management, benefit administration and
human resource management. These activities are affected
by forces eminent in policies and principles of the
organisation.
Organisational objectives are benchmarks against which
actions of a Human Resource Management Department
are evaluated (Shehzad: 2008:1). For human capital
activities that are designed to increase organisational
productivity to be effective, certain standards of
measurement or points of reference must be set. The
primary objective of human capital management therefore,
is to ensure the availability of a competent and willing
workforce to an organisation. Beyond this, there are other
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
29 Management in Nigeria
objectives too. Specifically, human capital management
objectives are four fold societal, organisational,
functional and personal. (Aswathappa, 2005:8). The
implication of organisational objectives on human capital
planning and management is that the planners and
managers must plan and manage human capital in line with
organisational goals. No more, no less.
Whatever the size of an organisation and however the
human capital management functions and objectives are
structured and located, there will be a need to communicate
to employees their terms and conditions of employment
and operations. These employment guidelines are usually
reflected in human capital policies. Shehzad (2007:3)
opined that polices are general statements that serve to
guide decision making. Armstrong (2004:129) gave a
more detailed definition of policies as he believed that they
are continuing guidelines on the approach an organisation
intends to adopt in managing its people. According to him,
they define the philosophies and values of an organisation
on how people should be treated, and from these are
derived the principles upon which managers are expected
to act when dealing with human capital matters.
Organisational policies therefore serve as reference points
when human resource management practices are being
developed, and when decisions are being made about
people. They help to define the way things are done. It is
clear that organisational objectives, policies and principles
exert pressure on the human capital planning and
management.
RESULTS
The questionnaire was distributed to 385 middle level staff
of the five selected organisations and 349 copies
representing 92% were completed and returned as shown
in Table 1.2
Table 1.2 Breakdown of Sample size According to Organisations
Organisation Sample Size
National Directorate of Employment (NDE) 64
Power Holding Company of Nigeria (PHCN) 116
Plateau State Water Board (PSWB) 14
Federal Ministry of Finance (FMF) 79
Nigerian National Petroleum Corporation (NNPC) 112
Overall Sample Size 385
Source: Field Survey, 2011
The study set out to provide the necessary lead for
empirical examination of the impact of environmental
forces in the management and planning of human capital.
Specifically, it tried to assess the impact of political;
traditional and military rulers; globalization; economic
meltdown; technological changes; and corporate strategic
planning on human capital planning and management.
For these reasons, the following hypotheses were
formulated:
1) Hypothesis 1: Political, traditional and military leaders'
influences have no significant impact on human capital
planning and management.
The implication of organisational objectives on human capital
planning and management is that the planners and managers must
plan and manage human capital in line with organisational goals.
No more, no less.
THE IMPACT OF THE ENVIRONMENT ON THE MANAGEMENT OF HUMAN CAPITAL
30 Management in Nigeria
Table 1.3 - Opinion of Respondents on the Impact of Political, Traditional and Military Influence on
Human Capital Planning and Management.
Q/
NO
QUESTIONNAIRE
STATEMENT
RESPONSE FREQU-
ENCY
%
Q1
Q2
Q3
Political practices and influence
affects human capital planning
and management in my
organisation.
Traditional rulers influence (also
known as godfatherism) do
compel my organisation to
employ the wrong type and
number of workers.
The military personnel do
compel my organisation to
employ the wrong type and
number of workers and this is
sometimes done even when
such vacancies do not exist
Agreement category
Disagreement
category
Undecided
Agreement category
Disagreement
category
Undecided
Agreement category
Disagreement
category
Undecided
306
23
20
212
92
45
212
92
45
87.7
6.6
5.7
100%
60.8
26.3
12.9
100%
60.8
26.3
12.9
100%
Source: Field Survey, 2012
Table 1.3 showed that 87.7% of the total respondents
agreed that political influences affect human capital
planning and management. About 6.6% thought
otherwise while 5.7% was undecided on the question
posed. Also, 60.8% of the total respondents agreed that
traditional rulers do compel their organisations to recruit
the wrong type and number of workers, whereas 26.3%
thought otherwise while 12.9% were undecided on the
question posed. Lastly, on the question of whether or not
military personnel do compel organisations to employ the
wrong type and number of employees even when such
vacancies do not exist, 60.8% of the total respondents
agreed while 26.3% disagreed. About 12.9% were
undecided on the question posed.
The Kruskal-Wallis one-way analysis of variance by ranks
named after William Kruskal and W. Allen Wallis was used.
It is a non-parametric method for testing equality of
population medians among groups. It is identical to a one-
way analysis of variance with the data replaced by their
ranks. It is an extension of the Mann-Whitney U test to 3 or
more groups (Kruskal et al, 1952: 583-621). The test
statistic is given by:
K =12
N(N + 1)
g
i=1
g
2
2
12
N(N + 1)=
_r i.
_ N + 1ni
i=1
ni_r
2
i. 3(N + 1)_
where: n is the number of observations in group i ;r is the i ij
rank (among all observations) of observation j from group
I; N is the total number of observations across all groups
and is the average of all the r . ij
However, the Kruskal-Wallis computer-statistical package
for social sciences (SPSS)-16.O version was used to test the
impact of political, traditional and military; globalization,
economic conditions and technologica