Privatisation Of Public Agency

Introduction

The concern for privatisation of public sector enterprises has been taken as the “new adjustment measures” since the recession in the early eighties (Gouri et. al., 1991). The definition of privatisation varies depending on one’s perspective. One would normally define privatisation as the selling of government assets to the private sector as the government is no longer able to finance or to produce the goods and services.

Economically, it is defined as a ‘process that aims at reducing involvement of the state or the public sector in the nation’s economic activities’ (ibid). According to Thynne and Ariff (1989), privatisation “does not necessarily mean the full transfer of public functions to the private sectors” and “lack of interest” of the government, but as “initiatives designed to alter the balance between the public and private sectors” (Cook & Kirkpatrick, 1988).

This report contains an elaboration of the term privatisation, type of privatisation and a little bit of the history. Then it will be narrowed down to the privatisation policy in Brunei Darussalam and government agencies that had undergone the process. Thus, main content of this report will be on the case study of the potential to be privatised government agency in Brunei - Department of Electrical Services (DES).

Government as the Owner of Industry and Privatisation

Government has been seen as “the owner of industry or a producer of goods” (Connolly & Munro, 1999). But being the absolute owner could bring a negative aspect to the industry such as crowding out of private sector (Lawrey as cited in EDPSGO, 2005). The reasons for the crowding out are due to:

1. Legislated monopoly

2. State-owned-enterprises get preferential treatment from government...

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...sector may cause them to lose these, and even worse, retrenchment is highly possible. As a profit-maximising enterprise, cutting costs will be its main concern. So, services of employees who are considered to be not performing are most likely to be discontinued.

Conclusion

Privatisation of the electricity sector may be the best way out to increase its efficiency as the power provider. However, the government will need to consider the drawback that consumers may face especially in the pricing policy where high prices may be charged to them. The inequality of distribution in the delivery of the service also should be taken in to consideration. Therefore, public-private partnership could be another option for the government to ensure efficiency of the enterprise as well as having a significant control over it so that the welfare of the people will not be put a stake.