Privatization Of Public Utilities

2065 Words9 Pages
Privatization is an umbrella term that encompasses a broad range of private sector participation in public services. Partnerships between the public and private sectors in the water industry range from providing basic services and supplies to the design, construction, operation, and ownership of public utilities. The following are three models of water privatization: • Outsourcing - Private contracting for water utility plant operation and maintenance (O&M) and private provision of various services and supplies such as laboratory work, meter reading, and supplying chemicals. • Design, build, and operate (DBO) - Negotiating a contract with a private firm for coupling design and construction services with comprehensive operating agreements for new, expanded, or upgraded facilities. Asset sale - The sale of government-owned water assets to private water companies . The private operator has few economic incentives to promote water conservation because a corporation’s chief goal is to maximize profits, which often means encouraging increased consumption. Private water companies also have little reason to leave sufficient water for ecological needs, endangered species, and other downstream uses. Privatization agreements may also result in reduced water quality because private water companies make decisions based on profitability rather than public health. Especially in the case of asset sales, there is concern about land that may be subject to development. When a private operator purchases a municipality’s water-related assets, they may include the municipality’s watershed areas as well as industrial equipment. Since preservation of watershed lands does not generate revenue, the operator may either want to develop the watershed area or sell it off to others for development. Q. What other concerns have been raised regarding the privatization of
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