Legal Definitions - privatization

Privatization refers to the process where a business, service, or industry that was previously owned, managed, or controlled by the government is transferred to private ownership and operation.

This transfer can involve selling government assets to private companies or individuals, or contracting out public services to private entities. The goal is often to increase efficiency, reduce government spending, or stimulate competition.

Here are some examples to illustrate:

• Imagine a country's national airline, which has always been owned and operated by the government. If the government decides to sell its shares in the airline to private investors and companies, allowing them to take over its management and operations, this would be an act of privatization. The airline, once a state-run entity, would then become a private enterprise.

• Consider a city that has traditionally managed its own waste collection and recycling services using municipal employees and equipment. If the city council decides to stop providing these services directly and instead awards a contract to a private waste management company to handle all residential and commercial refuse collection, this is another form of privatization. The service, though still for the public good, is now delivered by a private business rather than the government.

• In some regions, major infrastructure like national railway networks might be built and operated by a government agency. If the government later chooses to sell off the railway lines, stations, and train operations to a consortium of private companies, allowing them to run the passenger and freight services, this constitutes privatization. The entire railway system transitions from public ownership and control to private hands.