Journal of Energy Technologies and Policy www.iiste.org ISSN 2224-3232 (Paper) ISSN 2225-0573 (Online) Vol.4, No.6, 2014 60 The Operations of the Power Holding Company of Nigeria and Discriminatory Monopoly Tobi Folasade Ejumudo Research and Development Department, Rohi Eclectic Consult Kelly Bryan Ovie Ejumudo Department of Political Science, Delta State University, Nigeria Abstract Efficient and effective electricity generation, transmission and distribution are critical to national development in both developed and developing societies. This study examines the constraining role of the prevailing discriminatory monopolistic environment in the actualization of adequate and sustained power supply in Nigeria. The data utilized in this study were derived from both primary and secondary sources. While the primary data were obtained from focused group discussions, the secondary data were sourced from relevant text books, journals and available statistics on electricity generation and supply in Nigeria. The findings of the study reveals that the discriminatory monopolistic environment typified by near absence of competition and poor service culture have severely constrained the much-desired adequate electricity generation capacity and effective service delivery in Nigeria. Finally, the study recommends among others that the Power Holding Company of Nigeria should operate in a competitive industrial environment where there exists a service culture. Key words: Operations, discriminatory monopoly, Power Holding Company, Nigeria. 1. Introduction Electricity plays a very important role in the socio-economic and technological development of every nation. Globally, electricity operations involve three critical activities namely: generation, transmission and distribution. These activities are not only cyclically connected; they are at the heart of the operations of the electricity industry in the energy sector. While electricity generation constitute the basis of the electricity supply chain because it provides the major plank for capacity building in the electricity sub-energy sector, the available electricity capacity generated requires an adequate transmission and a functional distribution system with the required wheeling capacity to meet national needs in terms of coverage and efficiency. At the end of the electricity supply chain is the distribution network that includes the voltage profile and the billing system that inter-faces with the public and ensures adequate network coverage and provision of quality power supply in addition to efficient marketing and customer service delivery. Central to the electricity generation, transmission and distribution activities in both developed and developing societies is the environment of competition and service culture that is almost absent in an industry that is monopolistic and dominated by a single operator. Notably, competitive environments encourage efficient and effective allocation of resources so as to achieve a favourably competitive output and gain a cutting edge advantage. Such environments lead to the development of a service culture and the resultant delivery of quality services. This is particularly because competition brings about the desire to outwit other players in performance and enjoy the cutting edge advantage in any industry or environment. Conversely, a monopoly misallocates resources by contriving shortages-producing less than the competitive output in order to create monopoly profits. There are also the associated costs of deadweight loss and monopoly rent seeking. The deadweight loss represents lost consumer surplus that was not converted into monopoly profits. This lost consumer surplus is received by no one. Consumers have lost it because the monopoly has restricted output, but it has not been received by anyone in the economy. This lost consumer surplus is referred to as the deadweight loss of monopoly. It is a deadweight loss because nothing is received in exchange for the loss; it is equivalent to throwing a valuable resource away. On the other hand, the rent seeking cost is hard to identify, but it seems likely that a great deal of managerial and entrepreneurial talent is spent seeking to establish monopoly power. This cost of monopoly has become known as monopoly rent seeking and it is a cost of monopoly because these resources are no longer available to produce goods and services. Still another cost of monopoly is inefficiency. Leibenstein (2012), for example, argues that while competitive firms are forced to be efficient by the market, this does not hold true for monopolies. This is largely because since monopoly is not punished by the market for slack management and the monopolist will tend to have more managerial “looseness” than a