Divesture/full Privatization PPP?

Divestiture refers to the process of selling off a government-owned asset or business to private investors. Full privatization, on the other hand, involves transferring complete ownership and control of a government-owned asset or business to private investors.

A Public-Private Partnership (PPP) is a collaboration between the public and private sectors to deliver a project or service. In the context of divestiture or full privatization, a PPP could involve the private sector taking over the ownership and operation of a previously government-owned asset or business.

In the case of divestiture, a PPP could involve the government selling off a portion of its ownership stake in a business to private investors while still retaining some level of control or involvement. In the case of full privatization, a PPP could involve the complete transfer of ownership and control to private investors, who would then be responsible for managing and operating the asset or business.

Overall, divestiture or full privatization through a PPP can help improve efficiency, increase competition, and attract private investment to sectors that were previously dominated by the government. However, it is important to carefully consider the potential impacts on stakeholders, such as employees, customers, and the broader community, when pursuing such initiatives.

Divesture

- Definition: The partial or complete sale of an asset or business unit by a government entity or organization to a private investor or entity.
- Objective: To raise funds, reduce government ownership and control, and improve efficiency and performance.

Full Privatization

- Definition: The complete sale of a government-owned asset or entity to a private investor or entity, resulting in the government having no ownership or control over the asset.
- Objective: To achieve the same objectives as divesture, but with a more comprehensive and permanent transfer of ownership and control.

Public-Private Partnership (PPP)

- Definition: A long-term contractual agreement between a government entity and a private entity to jointly deliver a public service or infrastructure project.
- Objective: To combine the resources, expertise, and risk-sharing capabilities of both sectors to achieve better project outcomes and public value.

Differences between Divesture, Full Privatization, and PPP

| Characteristic | Divesture | Full Privatization | PPP |
|---|---|---|---|
| Ownership transfer: | Partial or complete | Complete | Shared between government and private entity |
| Control: | Government retains some | Private entity has full | Shared between government and private entity |
| Government involvement: | Ongoing, in varying degrees | None | Ongoing, in supervisory and regulatory roles |
| Risk allocation: | Primarily with private entity | Primarily with private entity | Shared between government and private entity |
| Objective: | Raise funds, improve efficiency | Transfer ownership and control | Deliver public services or projects |

Considerations for Choosing between Options

- Nature of the asset or service: Is it core or non-core to government functions?
- Financial implications: Potential revenue, cost savings, and risk mitigation.
- Public policy objectives: Alignment with social, economic, or environmental goals.
- Political climate: Level of public support for privatization or divestment.
- Expertise and capabilities of the private sector: Availability of qualified entities to undertake the project.

Examples of Divesture, Full Privatization, and PPP

Divesture:
- Sale of state-owned telecommunications companies
- Privatization of public utilities such as water or electricity distribution

Full Privatization:
- Sale of government-owned airlines
- Privatization of prisons or healthcare facilities

PPP:
- Construction and operation of toll roads
- Development and maintenance of public parks
- Delivery of educational or healthcare services