Topics: Public sector, Privatization, Government Pages: 9 (1704 words) Published: February 28, 2014
Privatization and its repercussions
Hassan Shahzad (10-NTU-59)
Ahmad Hafeez (10-NTU-65)
Muhammad Fahad (10-NTU-67)
Zubair Shan (10-NTU-74)

Submission Date: 31-1-2014

Submitted to:

Mr. Malik Muhammad Sohail

Department of Weaving

Privatization is a movement to deregulate private industry and/or transfer many government services, assets and functions to the private sector.
Classic Privatization: Total transfer of assets and authority from the government sector to the for profit or nonprofit sector
 Purposes: Shrink government; Reduce risk and cost
 Reason: Often a response to economic downturn; Ideology
Modified Privatization: Private sector provision of a service with public sector funding for example direct funding for a private college, Private trash collection paid for by tax revenue. It can also be stated as the public sector provision of a service with private sector funding for example student tuition at public colleges

1.1 Functions of privatization
1.1.1 Deregulation
The act of freeing from regulation especially from governmental regulations or one can say that the reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

1.1.2 Decentralization
Moving the authority for a function from a central agency to an agency closest to where the activity is actually performed.
For the purposes of this study, privatization can be considered as occurring any time the government gives up some amount of control in any of several different ways. Examples include:
 Authorities (Regional Transportation District)
 Charters (schools)
 Deregulation (education )


 Transfer of assets to a private entity (Workers Compensation)  Contracting with for profit or nonprofit entities (e.g., building contractors, social services)
 Turning over a service (provision of, funding of) to an other than government entity
1.2 History
The history of privatization dates from Ancient Greece. In more recent times, Winston Churchill's government privatized the British steel industry in the 1950s. In the 1980s in the UK and USA, privatization gained worldwide momentum.

Notable privatizations in the UK included British Airways (1987), British Petroleum (gradually privatized between 1979 and 1987), British Aerospace (1985 to 1987), British Gas (1986), British Steel (1988), British Telecom (1984), Sea link ferries (1984), Rolls-Royce (1987) and the regional water authorities (mostly in 1989). After 1979, council house tenants in the UK were given the right to buy their homes.

In Pakistan

Privatization efforts began after the creation of Privatization Commission on January 22, 1991. Although the PC mandate initially restricted to industrial transactions, by 1993 it expanded to Power, Oil & Gas, Transport (aviation, railways, ports and shipping), Telecommunications and Banking and Insurance. During January 1991 to June 2006 the Commission completed 158 transactions for PRs. 353.574 billion.

During the financial year 2005-2006, the Commission has successfully completed 7 transactions, which includes privatization of 26% B class shares of PTCL, 73% shares of KESC, 85.29% shares of Mustehkam Cement. The total sale price amounts to PRs. 175.788 billion compared to PRs. 43.044 billion of the year 2004-2005. Recently the Privatization Commission Board has declared the 26% shares of Pakistan International Airlines to a strategic investors.


1.3 Recent Examples of Privatization
Recently all over the world, there are many public sectors enterprises which are being privatized. Some examples are Social Security, Medicare, Student loans, Military service, Highways, roads, bridges, Education, Libraries, Parks, Court services etc.

1.4 Repercussions of privatization
After having a brief site of meaning, history and forms of privatization now we come to the...
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