Robert H. Muller Managing Director JPMorgan Securities
A substantial public policy debate has emerged in recent years regarding which services can be best provided by governmental entities and those that the private sector can better supply. Governments have begun to realize the potential and substantial financial benefits from the leasing or sale of various assets. As a result, a whole range of proposals have been offered about the best ways that governments can divest or shift service delivery or the operation of important infrastructure assets from themselves to private companies. Implementation of these goals has been tried under various labels including contracting, public-private partnerships, privatization and concessions. Distinguishing these terms is not an easy task.
The Government Accounting Office in July 1997 released a special publication discussing the process and procedures related to privatization. The GAO stated:
Under a public-private partnership, sometimes referred to as a joint venture, a contractual arrangement is formed between public-and private-sector partners that can include a variety of activities that involve the private sector in the development, financing, ownership and operation of a public facility or service.365
The GAO went on to define privatization “as any process aimed at shifting functions and responsibilities, in whole or in part, from the government to the private sector.”366
Many governmental ...