CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

It is reasonable to argue that customers are to a business organization what the church was to medieval society. In the contemporary business environment, customer satisfaction has become a significant consideration in the delivery of services. This has greatly influenced the behaviour of service providers, including organizations that operate under monopoly conditions, as many of them recognize the importance of treating customers as a priority. Although competition in the electricity supply industry may be limited, systematically assessing customer satisfaction remains essential for improving service delivery, restoring competitive market conditions, and strengthening customer acceptance (Cardozo, 2015). Available evidence suggests that despite substantial public investment in Nigeria's energy sector, the performance of the former Power Holding Company of Nigeria (PHCN) did not adequately satisfy customers. Some industry stakeholders attributed the sector's poor performance to its organizational structure and consequently advocated its unbundling. Others believed that the state monopoly contributed to the problems and therefore supported privatization. In response to these concerns, the Nigerian government undertook both the unbundling and privatization of the electricity industry.

Globally, customer satisfaction has become an important instrument for assessing organizational performance and determining the extent to which an organization meets customers' needs. This explains why customer satisfaction indices and regulatory assessment systems have been established in different countries. These measures evaluate the performance of businesses, industries, and service providers from the customers' perspective, particularly in relation to loyalty, acceptance, and satisfaction with the services received. For example, the United States operates the American Customer Satisfaction Index (ACSI), while Sweden has the Swedish Customer Satisfaction Index (SCSI). A European Customer Satisfaction Index has also been developed to assess customer satisfaction across Europe. In today's rapidly changing economic environment, conducting business has become increasingly challenging. Companies must therefore adjust their marketing and commercial strategies to remain competitive. Customers now have access to a wide range of products and services and are more likely to patronize organizations that meet their expectations. Consequently, successful organizations are often those that provide superior value and quality services to their target customers (Kotler, 2014).

Customer satisfaction provides an important indication of an organization's past performance, current position, and potential future success. For this reason, it has remained a major concern among marketing scholars and practitioners (Oliver, 2014). Over the past two decades, extensive academic and commercial research has examined customer satisfaction because of its importance to business performance and economic development (Peterson and Wilson, 2012). High customer satisfaction can contribute to increased market share, stronger customer loyalty, improved profitability, and reduced transaction costs (Buzzell and Gale, 2014; Fornell, 2012; Gale, 2012; Hallowell, 2016; Jacobson and Aaker, 2013). Anderson, Fornell, and Lehmann (2014) identified a relationship between customer satisfaction and profitability. Similarly, customer satisfaction has been associated with customers' willingness to repurchase products or services and recommend service providers to other people (Anderson and Sullivan, 2013; Cronin and Taylor, 2012; Parasuraman, Zeithaml and Berry, 2013; Reichhel, 2016; Verhoef, Franses and Hoekstra, 2013; Zeithaml, Berry and Parasuraman, 2016).

According to Onuka (2016), ineffective management constitutes one of the major challenges facing Nigeria. The author observes that the country has not sufficiently developed its managerial capacity and that some individuals occupying management positions possess limited knowledge of management principles, including basic management practices. Onuka (2001) consequently emphasized the importance of providing managers and executives with appropriate leadership and management education. Such training can contribute to addressing managerial deficiencies and improving organizational performance across different sectors of the Nigerian economy.

Nigeria's geographical circumstances and economic position relative to other African countries have presented several challenges to the distribution of electricity over the years. Understanding the difficulties and opportunities associated with electricity delivery and distribution is important because it can help improve managerial decision-making and support the achievement of organizational objectives. An effective assessment of the electricity distribution system requires attention to the quality of management, the availability of resources, operational challenges, and the experiences of customers who depend on the services provided.

Organizations operating within the Nigerian electricity industry have responsibilities relating to the regulation, management, and distribution of electricity. Their activities are directed towards achieving specific objectives with the resources available to them. Jones (2013) explains that the efficient utilization of organizational resources is an indication of management's ability to accomplish realistic and predetermined objectives. Such efficiency depends on the organization's capacity to plan, organize, direct, and control its resources, including financial, human, and material resources. When an organization fails to manage its resources appropriately, it may struggle to meet its responsibilities and overcome the challenges associated with providing goods and services to customers. This concern has been associated with the difficulties experienced in Nigeria's electricity sector (Ijewere, 2012).

Ijewere (2012) further explains that electricity generation and distribution have become increasingly important because of the essential role electricity plays in everyday life and economic activities. Prolonged power interruptions or the complete absence of electricity can create significant inconvenience for households and businesses while reducing productivity. Mohammed (2015) identifies energy consumption as an important indicator of living standards and the level of industrial development in a country. Similarly, Darling et al. (2013) and other authors describe Nigeria as experiencing serious electricity shortages arising from structural, sociopolitical, and financial challenges. These conditions point to persistent weaknesses in the management and distribution of electricity. The problems may be connected to deficiencies in planning, policy formulation, resource allocation, and the implementation of electricity distribution programmes.

Nigeria has experienced inadequate and inconsistent electricity supply for an extended period, with considerable consequences for the domestic economy (Oshodi, 2014). This situation indicates continuing inefficiencies in the country's electricity distribution system. Such shortcomings affect economic activities and make it difficult for households and businesses to depend on a stable power supply. Oshodi (2014) also argues that the electricity industry remains one of the sectors whose performance reflects Nigeria's continuing developmental challenges. Where substantial portions of the population lack reliable access to electricity, the difficulties associated with distributing electricity to consumers become increasingly apparent. Olawale et al. (2013) suggest that insufficient planning and inadequate projections for future electricity demand have contributed to the sector's challenges. These weaknesses reflect shortcomings in management and have affected the efficiency of electricity supply and distribution. The authors further point to inadequate strategic planning and investment, as well as the misallocation of funds, as factors that have undermined the development of the industry.

The availability of adequate infrastructure is essential for the effective generation, transmission, and distribution of electricity. However, infrastructure deficiencies have remained a major obstacle to the performance of Nigeria's electricity sector. Much of the infrastructure has been described as old or outdated and insufficient to meet the country's contemporary electricity requirements. Awosope (2014) notes that infrastructure can be damaged by environmental and natural factors, including trees interfering with electricity lines, windstorms, lightning, and other adverse conditions. Inadequate maintenance further contributes to the deterioration of electricity distribution infrastructure. These challenges suggest that weaknesses in maintenance planning, supervision, and infrastructure management have affected the reliability of electricity distribution in Nigeria.

Another challenge facing the Nigerian electricity sector is the imbalance between the demand for electricity and the quantity available for distribution. Awosope (2014) observes that electricity distribution remains inadequate in relation to the country's population and its growing energy requirements. The challenge of insufficient electricity generation and distribution has existed for several decades. During the 1970s, for example, improvements in workers' economic circumstances following the Udoji reforms were accompanied by increased purchasing power and greater consumption of electricity-intensive equipment. Such developments contributed to growing electricity demand. Where the available supply fails to increase in line with demand, distribution companies experience difficulties meeting consumers' needs. This situation emphasizes the importance of effective planning, organization, and control in responding to changing electricity requirements.

Inadequate financing has also contributed significantly to the difficulties experienced in electricity distribution. According to Awosope (2014), limited financial resources have restricted the acquisition of modern equipment and the improvement of electricity infrastructure. Although concerns about corruption and mismanagement have been raised within the sector, the availability of sufficient funds has also remained an important issue. Inadequate financing can prevent the timely replacement of obsolete equipment, maintenance of existing infrastructure, and development of additional electricity sources. Lum (2012) observes that securing adequate funding is essential for maintaining existing facilities and establishing new sources of energy. Financial constraints can also delay the repair of damaged infrastructure and other essential operational facilities. The author further identifies access to capital as a major obstacle to improving electricity supply in Nigeria. In addition, inadequate remuneration and delayed salary payments may negatively affect employee morale and efficiency. Where workers experience poor working conditions or irregular payment, their ability and willingness to perform effectively may be affected, with possible consequences for electricity supply and distribution.

The challenges discussed above, together with other unresolved problems, demonstrate the difficulties associated with electricity distribution in Nigeria. It is therefore important to examine how available resources can be utilized more effectively and why electricity distribution continues to experience inefficiencies in a country recognized for its petroleum resources. An understanding of these issues requires an assessment of management practices, service delivery, and customer experiences. This study consequently focuses on customer perceptions of the Abuja Electricity Distribution Company (AEDC) and the former Power Holding Company of Nigeria (PHCN), with particular attention to electricity distribution services and customer satisfaction within the Federal Capital Territory (FCT), Abuja. The study seeks to identify weaknesses in service delivery, assess customers' experiences, and propose measures that may improve the quality of electricity distribution services.

1.2 Statement of the Problem

The provision of electricity to consumers involves several stages, beginning with generation, followed by transmission, and ending with distribution to end users. These stages involve different organizations and administrative structures, and the effectiveness of their operations influences the quality and reliability of electricity services delivered to the public. Since this study concentrates on electricity distribution in Nigeria, particular attention is given to the management of distribution services and the perceptions of customers who depend on them.

At the managerial level, it is important to determine whether those responsible for directing and supervising electricity distribution possess the necessary qualifications, professional training, and managerial competencies. Effective management requires appropriate planning, resource allocation, supervision, and control. Weaknesses in these areas may contribute to unreliable electricity supply, inadequate customer service, and the inefficient utilization of resources.

Over the years, Nigeria's electricity sector has experienced persistent challenges, including limited access to electricity, irregular supply, and frequent interruptions. Even consumers connected to the electricity network may experience inconsistent service. These circumstances raise questions about the effectiveness of electricity distribution management and the extent to which distribution companies satisfy the expectations of their customers. An assessment is therefore necessary to understand the contribution of management practices to electricity distribution and to examine customer perceptions of service delivery and satisfaction with the quality of services received.

Understanding customer satisfaction is important to marketing practitioners because satisfaction can influence customers' decisions to continue using a service and repeat their purchasing behaviour (Wells and Prensky, 2016). The concept of customer satisfaction is closely associated with the expectation-disconfirmation theory, which is commonly linked to Oliver's work and earlier research on consumer expectations. In this context, Cardozo (2015) explains customer satisfaction in terms of the comparison between customers' expectations and their perceptions of actual performance. In other words, customers assess a service by comparing what they expected to receive with the experience they eventually encounter. McDougall and Levesque (2010) similarly describe satisfaction as a customer's overall evaluation of a service provider.

Oliver (2010) defines satisfaction as an evaluative response indicating the extent to which a product or service provides a pleasant level of fulfilment through its use or consumption. Such fulfilment may be below, equal to, or above the level expected by the customer. Oliver (2015) further explains disconfirmation as the difference between customers' expectations of a product or service and their perceptions of its actual performance. When the service falls short of expectations, customers may perceive its quality negatively and experience dissatisfaction. Conversely, when the service meets or exceeds expectations, customers may evaluate its quality more positively and report greater satisfaction (Bitner, 2010; Kandampully, Mok and Sparks, 2011).

Oliver (1989) also describes satisfaction as a cognitive, affective, or emotional response to the performance of a product or service. Crompton and MacKay (2012) similarly explain that satisfaction represents a psychological outcome arising from an individual's experience. Bolton and Drew (2011) argue that satisfaction can be assessed by considering customers' perceptions of service performance. From this perspective, customer satisfaction reflects the extent to which a service meets customers' needs, performs as expected, and creates positive experiences. It is therefore necessary to identify customers, understand their experiences with electricity distribution services, assess the challenges they encounter, and use the findings to evaluate the performance of service providers.

In the context of AEDC and PHCN, customer perceptions are important for determining whether the electricity distribution services provided correspond with consumers' expectations. Issues such as the reliability of electricity supply, the frequency and duration of interruptions, the responsiveness of customer service, the handling of complaints, and the general quality of distribution services may influence customer satisfaction. If these aspects of service delivery do not meet expectations, customers may develop negative perceptions of the distribution companies.

Despite the importance of customer satisfaction, there is a need to assess the extent to which customers in the Federal Capital Territory are satisfied with electricity distribution services and to determine the relationship between perceived service quality and satisfaction. It is also necessary to establish whether a gap exists between customers' expectations and their actual experiences, and to identify measures that could improve service delivery. Addressing these issues may provide useful information for evaluating the performance of AEDC and understanding the concerns of electricity consumers in Abuja.

Consequently, this study investigates customer perceptions of AEDC and PHCN in the FCT, Abuja, by examining the gap between expected and perceived service quality, determining customers' levels of satisfaction, assessing the relationship between service quality and satisfaction, and recommending measures for improving electricity distribution services.

1.3 Objectives of the Study

The general objective of this study is to analyse customers' perceptions of AEDC and PHCN, using the Federal Capital Territory, Abuja, Nigeria, as the geographical focus.

The specific objectives are to:

1. Identify the gap between customers' expectations and their perceptions of the service quality provided by AEDC and PHCN.

2. Determine the level of customer satisfaction with the service quality of AEDC and PHCN.

3. Examine the relationship between electricity distribution service quality and customer satisfaction.

4. Recommend measures for improving customer satisfaction with AEDC and PHCN, with particular reference to the quality of their electricity distribution services.

1.4 Research Questions

The following research questions were formulated in line with the identified problem and the objectives of the study:

1. Is there a gap between customers' expectations and their perceptions of the service quality provided by AEDC and PHCN?

2. What is the level of customer satisfaction with the service quality of AEDC and PHCN?

3. What relationship exists between electricity distribution service quality and customer satisfaction?

4. What measures can be adopted to improve customer satisfaction with AEDC and PHCN, particularly in relation to the quality of their electricity distribution services?

1.5 Research Methodology

Research design refers to the overall plan or framework developed to guide a study towards achieving its objectives and answering its research questions (Cooper and Schindler, 2016). Research may be conducted using different approaches, including observation, focus-group discussions, surveys, and experiments (Kotler, 2014). However, no single research approach is suitable for every research situation, as the appropriate method depends on the nature of the problem and the objectives of the investigation (Azim, 2011).

This study adopts a comparative cross-sectional survey design. The design is appropriate for collecting information from respondents at a particular point in time and comparing their views regarding the electricity distribution services provided by AEDC and PHCN. A questionnaire serves as the principal research instrument for collecting data on customers' expectations, perceptions of service quality, and levels of satisfaction. The information obtained will be analysed in accordance with the research objectives and questions.

1.6 Research Hypotheses

The following null hypotheses are formulated for testing at the 0.05 level of significance:

H₀₁: There is no statistically significant relationship between customer perception and customer satisfaction.

H₀₂: Service quality has no statistically significant relationship with customer satisfaction.

1.7 Significance of the Study

The findings and conclusions of this study are expected to contribute to the existing body of knowledge on the challenges associated with electricity distribution management in Nigeria. By examining customer perceptions and satisfaction, the study seeks to identify areas in which service delivery may be improved. Its attention to management practices, planning, organization, leadership, and control may provide a basis for developing recommendations that could strengthen the management of electricity distribution and improve the reliability of services provided to consumers.

The study may also be useful to government ministries, departments, agencies, and other institutions responsible for formulating and implementing policies relating to the Nigerian electricity sector. The findings may help policymakers develop a clearer understanding of the challenges encountered in electricity distribution and the ways in which policy decisions affect service delivery. This understanding may support the formulation of policies that encourage effective resource utilization, improve operational performance, and strengthen accountability within the electricity industry.

Furthermore, the recommendations arising from the study may benefit electricity consumers, including households and businesses that experience inadequate or inconsistent electricity supply. Improving electricity distribution services could contribute to better living conditions, increased productivity, and reduced difficulties associated with unreliable power supply. Reliable electricity is important for domestic activities, commercial operations, industrial production, and the delivery of various essential services. Consequently, improvements in electricity distribution may have positive implications for economic development.

The study may also contribute to broader economic development by highlighting the importance of effective electricity distribution management. Reliable power supply can support productivity across different sectors, improve the operating conditions of businesses, and make the economic environment more attractive to potential investors. By identifying weaknesses in service delivery and suggesting practical improvements, the study may help draw attention to the role of electricity distribution in supporting economic activity.

In addition, the study is significant because customer satisfaction is an important concept in understanding consumer behaviour (Ross and Iso-Ahola, 2011). A clear understanding of customers' experiences and expectations is valuable to service providers seeking to improve their operations (Crompton, 2014; Schneider and Sonmez, 2013). In the electricity sector, evaluating customer satisfaction in relation to service quality can provide information about the areas in which consumers consider service delivery inadequate.

The study may provide AEDC and relevant electricity-sector stakeholders with information that can be used to understand customer concerns, evaluate the perceived quality of distribution services, and identify opportunities for improvement. Since perceived service quality is widely discussed as an important factor influencing satisfaction, examining the relationship between the two concepts may help management determine which aspects of service delivery deserve greater attention (Churchill and Supernant, 2012). Previous discussions of service quality have also emphasized its relevance to customer satisfaction (Bojanic, 2016; Bateson, 2017).

Finally, the study may serve as a useful reference for students and researchers interested in customer perception, service quality, customer satisfaction, electricity distribution, and utility management. It may provide a foundation for further investigations into the experiences of electricity consumers and the effectiveness of service-delivery practices in Nigeria.

1.8 Scope of the Study

The electricity sector generally involves three major stages: generation, transmission, and distribution. Generation involves producing electricity, transmission concerns moving electricity over high-voltage networks, while distribution involves delivering electricity through local networks to end users.

This study is limited to the distribution stage of the electricity supply process. It focuses on customers' perceptions of the service quality provided by AEDC and PHCN and the relationship between perceived service quality and customer satisfaction. The study considers the differences between customers' expectations and their actual experiences, their overall satisfaction with electricity distribution services, and possible measures for improving service delivery.

Geographically, the study is restricted to the Federal Capital Territory, Abuja, Nigeria. The area provides the setting for examining customers' experiences and perceptions of electricity distribution services associated with AEDC and the former PHCN. The findings will be interpreted within the context of the study's selected respondents and geographical coverage.

1.9 Limitations of the Study

Several limitations may arise during the conduct of this research. First, the study relies on primary data obtained directly from respondents through fieldwork and the administration of questionnaires. Collecting first-hand information requires time, financial resources, and considerable effort to reach respondents and obtain their cooperation. These requirements may place constraints on the research process.

Second, obtaining detailed and verifiable information about electricity distribution companies may be difficult. Information relating to internal management practices, operational performance, service delivery, and customer satisfaction may not always be readily accessible. This limitation may restrict the extent to which customers' experiences can be compared with internal organizational records.

Third, respondents may provide answers based on their personal experiences, expectations, or opinions about the electricity distribution companies. Differences in individual experiences may affect the consistency of the responses obtained. Some respondents may also be unwilling to provide detailed information about their dissatisfaction or experiences with the service providers.

Finally, the geographical restriction of the study to the FCT, Abuja, may limit the extent to which the findings can be generalized to customers in other parts of Nigeria. Electricity distribution conditions and customer experiences may vary across locations. Nevertheless, the study is expected to provide useful information about customer perceptions and satisfaction within its defined scope.

1.10 Conceptual Definition of Terms

Customer Perception: In this study, customer perception refers to the opinions, attitudes, and beliefs of electricity consumers concerning the quality of services, service delivery practices, and management of the electricity distribution companies.

Customer Satisfaction: Customer satisfaction refers to the extent to which electricity distribution services meet or exceed consumers' expectations and provide an acceptable level of service.

Service Quality: Service quality refers to the extent to which the electricity distribution companies provide services that meet customers' needs and expectations. In this study, it relates to consumers' assessments of the quality and reliability of electricity distribution services.