Question

Privatization of Enterprises is enabled by Public Sector Law. If the exercise was mismanaged what laws can be used to provide redress and remedies and what could be the defenses available to answer to the allegations of mismanagement?

Answer 1

Privitization was supported because it was believed that the shift from public to private management will trigger multiple benefits like- boosting the efficiency and quality of remaining government activities, reducing taxes, and shrinking the size of government. The belief was that the profit making nature of the private sector will lead to cost cutting and greater attention to customer satisfaction (Electrical utilities is one prime example). Argentina, for example, did a privatization move by selling its telephone business, national airline, and petrochemical company for more than $2.1 billion.

However there are critics which believe that private ownership does not mean more efficiency. They think, private sector will employ profit-making strategies which will make essential services unaffordable and unavailable to large segments of the population.

A private operation may not, choose health care for all which will be an abuse to the birthright of the citizens.

Certain laws like pricing caps, are usually employed by the government at time of sale, which will prohibit the private sector to raise prices to such a level that will make the operations unaffordable and prevent the citizens being taken advantage of