Traditional Means of Communication

Q: What is a Public Corporation?

See the detailed explanation in this article about traditional means of communication.

What is a Public Corporation?

A public corporation is a business organization owned and controlled by the government to provide essential services to citizens. It is set up by law (Act of Parliament or Decree) to run specific services like electricity, railways, or water supply without focusing mainly on profit.

Quick Summary: Key Features of Public Corporations

Created by special law (Act or Decree)
Owned 100% by government
Managed by Board of Directors appointed by government
Provides essential services to the public
Can sue and be sued as a separate legal entity
Accountable to government minister and National Assembly
Focus on service delivery more than profit

Understanding Public Corporations in Nigeria

When you travel by train from Lagos to Kano, you use the Nigerian Railway Corporation (NRC). When NEPA (now PHCN) brings electricity to your house, that’s a public corporation providing service. These organizations are different from normal companies because government owns them completely and they exist to serve Nigerians, not to make maximum profit.

Public corporations handle services that are too important to leave to private business alone. Imagine if only rich people could afford electricity or train transport. Public corporations help ensure everyone can access these basic services at affordable prices.

Main Features of Public Corporations

1. Created by Special Law

Unlike normal companies that you can start by just registering at CAC (Corporate Affairs Commission), public corporations must be created by law. The President signs an Act, or in military times, a Decree.

Examples in Nigeria:

NNPC (Nigerian National Petroleum Corporation) – created by Decree No. 33 of 1977
NRC (Nigerian Railway Corporation) – Railway Act
NIPOST (Nigerian Postal Service) – NIPOST Act
NPA (Nigerian Ports Authority) – NPA Act

This law states the corporation’s powers, duties, and how it should operate. The law also explains how government will fund it and who will manage it.

2. Full Government Ownership

The government owns 100% of public corporations. No private person can buy shares in them. This is different from public limited companies like Dangote Cement where anyone can buy shares at the stock exchange.

Government provides the capital through:

Direct grants from national budget
Loans guaranteed by government
Revenue the corporation earns from services

Because government owns everything, it also controls everything – the good and the bad of this ownership.

3. Managed by Board of Directors

Public corporations have a Board of Directors, but these directors are not elected by shareholders (because there are no private shareholders). Instead, the President or Minister appoints them.

The Board typically includes:

A Chairman (often a politician or respected person)
Managing Director/CEO (runs day-to-day operations)
Executive Directors (heads of departments)
Non-executive Directors (experts from outside)

For NNPC, the President appoints all Board members. They serve for fixed terms, usually 3-5 years, and can be removed by the President.

4. Not Primarily Profit-Oriented

This is the biggest difference from private companies. While public corporations should not waste money, their main goal is service, not maximum profit.

Example: NRC runs trains to remote villages even though those routes lose money. A private company would cancel unprofitable routes, but NRC continues because citizens in those villages need transport.

However, this doesn’t mean they should run at a loss forever. Good public corporations try to at least break even (revenue equals expenses) or make small profit to reduce government subsidies.

5. Separate Legal Entity

Public corporations are legal entities. This means they can:

Sue: If someone damages NIPOST property, NIPOST can take them to court
Be sued: If NPA delays your container and causes you loss, you can sue NPA
Own property: NNPC owns refineries, pipelines, filling stations in its own name
Enter contracts: Sign agreements to buy equipment, hire staff, borrow money
Exist continuously: Even if the MD dies, the corporation continues

This is different from government departments like the Ministry of Education. Ministries cannot sue or be sued separately – you would sue “The Federal Government,” not the ministry itself.

6. Accountable to Minister and National Assembly

Public corporations must report to:

The Supervising Minister: Each corporation has a minister who oversees it. NNPC reports to the Minister of Petroleum. The minister can ask questions, request reports, and even remove Board members if they perform poorly.

The National Assembly: Every year, public corporations must present their accounts and reports to the Senate and House of Representatives. Lawmakers can question the MD about losses, waste, or poor service.

The Auditor-General: Government auditors check their books to prevent corruption and ensure money is spent properly.

This accountability is meant to prevent waste and corruption, though it doesn’t always work perfectly in practice.

7. Enjoys Some Government Privileges

Public corporations get certain advantages:

Monopoly power: Often they are the only provider of a service (like NPA for sea ports)
Government guarantees: Banks lend to them easily because government backs their loans
Tax exemptions: Many don’t pay some taxes that private companies must pay
Subsidies: If they lose money, government gives them grants to continue operating
Regulatory power: Some can make rules for their industry (like NCC for telecommunications)

8. Employ Large Numbers of Staff

Public corporations are often huge employers. NNPC employs thousands of Nigerians. NRC has staff across all 36 states. This is both good (creates jobs) and bad (can be inefficient with too many workers).

Employees are usually civil servants or on similar terms, with job security, pensions, and housing allowances. This makes the corporations attractive employers but also expensive to run.

Comparison: Public Corporation vs Private Limited Company

Feature	Public Corporation	Private Limited Company
Ownership	100% government owned	Owned by private shareholders
How Created	By Act of Parliament or Decree	By registration at CAC
Main Objective	Provide essential services to public	Make maximum profit for owners
Management	Board appointed by President/Minister	Board elected by shareholders
Accountability	To Minister and National Assembly	To shareholders at AGM
Capital Source	Government grants and internally generated revenue	Shareholders’ capital and bank loans
Profit Distribution	Paid to government treasury	Paid as dividends to shareholders
Size	Usually very large with many employees	Can be small, medium, or large

Examples of Public Corporations in Nigeria

1. Nigerian National Petroleum Corporation (NNPC): Manages Nigeria’s oil and gas resources. Owns refineries in Port Harcourt, Warri, and Kaduna. Recently transformed to NNPC Limited in 2022 under Petroleum Industry Act but still government-owned.

2. Nigerian Railway Corporation (NRC): Provides rail transport across Nigeria. Runs trains from Lagos to Kano, Abuja to Kaduna, and other routes.

3. Power Holding Company of Nigeria (PHCN): Was responsible for electricity generation and distribution (now mostly privatized, but was a public corporation).

4. Nigerian Ports Authority (NPA): Manages all seaports in Nigeria including Apapa, Tin Can Island, Port Harcourt, Calabar ports.

5. Nigerian Postal Service (NIPOST): Handles postal services – letters, parcels, courier services nationwide.

6. Federal Airports Authority of Nigeria (FAAN): Manages all federal airports including Lagos, Abuja, Kano, Port Harcourt airports.

7. Nigerian Broadcasting Corporation (NBC): Regulates broadcasting and runs some radio/TV stations.

Advantages of Public Corporations

Provide Essential Services: Ensure citizens get basic services like electricity, water, transport even in unprofitable areas
Prevent Exploitation: Government control prevents private monopolies from charging excessive prices
Large-Scale Operations: Can afford huge projects like railway networks that private companies cannot
Job Creation: Employ thousands of Nigerians across the country
Revenue for Government: Profitable ones like NNPC generate income for government
Strategic Control: Government keeps control of critical resources like oil, ports, airports

Disadvantages of Public Corporations

Political Interference: Ministers and politicians interfere in management, leading to poor decisions
Inefficiency: Often overstaffed and wasteful compared to private companies
Poor Service: Without competition, they may provide low-quality service (remember old NEPA: “Never Expect Power Always”)
Corruption: Large budgets and poor oversight create opportunities for corruption
Burden on Government: Loss-making corporations need constant subsidies, draining government budget
Slow Decision-Making: Too much bureaucracy and need for government approval slows things down

Recent Developments: Privatization and Commercialization

Many Nigerian public corporations have been privatized (sold to private investors) or commercialized (made to operate like businesses) since the 1990s. Examples:

NITEL (Nigerian Telecommunications) – privatized
PHCN – broken up and sold to private companies
Some refineries – government tried to privatize
NNPC – converted to NNPC Limited in 2022 to operate more commercially

The goal is to improve efficiency and reduce government spending on subsidies.

Common WAEC Exam Mistakes About Public Corporations

What WAEC Examiners Say Students Get Wrong:

1. Confusing public corporation with public limited company: These are completely different! Public corporation = government owned (NNPC). Public limited company = private company whose shares anyone can buy (Dangote Cement, GTBank). The word “public” means different things!

2. Writing “profit-oriented” instead of “not profit-oriented”: Many students forget that public corporations focus on service first, profit second. This is a key feature – don’t get it backwards!

3. Poor explanation of “legal entity”: Students write “it is a legal entity” without explaining what this means. Always add: “meaning it can sue and be sued, own property, and enter contracts in its own name.”

4. Not giving Nigerian examples: When asked to “state features” you can be brief. But when asked to “explain features” or “discuss,” you must give examples. Use NNPC, NRC, NIPOST, NPA – these names score you marks!

5. Mixing up Board of Directors with shareholders: Public corporations have Boards but no private shareholders. The government is the only “shareholder.”

6. Writing full sentences when asked to “state”: If question says “State five features,” you don’t need full explanations. “Created by Act of Parliament” is enough. Save time for questions that say “Explain” or “Discuss.”

Practice Questions

Multiple Choice Questions

1. A public corporation is created by:
a) Registering at Corporate Affairs Commission
b) Presidential proclamation
c) Act of Parliament or Decree ✓
d) Board of Directors resolution

2. The main objective of a public corporation is to:
a) Make maximum profit for shareholders
b) Provide essential services to the public ✓
c) Compete with private companies
d) Generate revenue for directors

3. Members of the Board of Directors of a public corporation are appointed by:
a) Shareholders at Annual General Meeting
b) The Minister or President ✓
c) The Managing Director
d) National Assembly

4. Which of these is NOT a feature of public corporations?
a) Government ownership
b) Separate legal entity
c) Profit distributed as dividends to private shareholders ✓
d) Accountability to Minister

5. An example of a public corporation in Nigeria is:
a) Dangote Cement
b) First Bank of Nigeria
c) Nigerian Railway Corporation ✓
d) Shoprite Nigeria

Essay Questions

Question 1: Explain five features of public corporations. (10 marks)

Examiner’s Tip: The word “explain” means give details. For each feature, write 2-3 sentences explaining what it means and give a Nigerian example. Don’t just list! Format: Feature name → What it means → Example.

Sample Answer Structure:

(i) Created by Special Law: Public corporations are established by Acts of Parliament or government Decree, not by simple registration. For example, NNPC was created by Decree No. 33 of 1977. This gives them legal backing and defines their powers and duties.

Question 2: Distinguish between a public corporation and a public limited company. (8 marks)

Examiner’s Tip: “Distinguish” means show the differences. Make a comparison – say what public corporation does, then what public limited company does differently. Cover at least 4 differences: ownership, how created, objective, management. Use Nigerian examples for both (NNPC vs Dangote Cement).

Question 3: State four advantages and four disadvantages of public corporations. (8 marks)

Examiner’s Tip: “State” means be brief – one sentence per point is enough. For advantages, think about service to citizens, job creation, strategic control. For disadvantages, think about inefficiency, corruption, political interference, losses.

Question 4: What is meant by saying a public corporation is a “separate legal entity”? (4 marks)

Examiner’s Tip: Define “separate legal entity” then explain what this means in practice. Mention at least three things: can sue and be sued, can own property, can enter contracts, continues even if people die or leave. Give an example using NIPOST or NPA.

Memory Aids

Remember main features with: C.O.M.M.A.L.S

C – Created by law (Act/Decree)
O – Owned by government
M – Managed by appointed Board
M – Mainly for service (not profit)
A – Accountable to Minister/Assembly
L – Legal entity (can sue/be sued)
S – Separate from government departments

Nigerian Public Corporations: N.N.N.N.F

N – NNPC (oil and gas)
N – NRC (railways)
N – NPA (ports)
N – NIPOST (postal services)
F – FAAN (airports)

Key Difference from Public Limited Company: P.L.C

P – Public Limited Company is Privately owned (shareholders buy shares)
L – Public Corporation has Law creating it (Act/Decree)
C – Public Limited Company is Created at CAC (just register)