that the sale of public assets is different from any other act of
government. It is necessary to tailor a process for each asset to be
sold so as to maximize the financial return to the public, minimize
potential liabilities to the public and concurrently build public
confidence in the process.
selling process should be swift, sure, open, fair, transparent and free
of opportunities for influence or secret commissions. The process
should be suitable for the particular to the item sold. The process
should be set and executed by a privatization committee of
knowledgeable persons nominated and agreed upon by all three political
parties if possible, a committee comprised of the governing party and
the Loyal Opposition may be acceptable as well. A negative vote of 20%
of the tripartite nominating committee should veto any nomination to
the privatization committee. Any process would be potentially open to
3) Sale mechanisms could include:
initial public offerings to the market
sale via consolidation
bundling of assets and liabilities for package and silent auction - e.g. similar to an insurance company sale
competitive open auction bid - i.e. process of public tender or open out crying e.g. like tobacco
sell to the employees
sell to the clients or tenants
sale of franchise, operating/billing rights.
could include provision for reference to fairness opinions which would
be subject to conflict of interest considerations.
5) Taxpayers, ratepayers and consumers should receive net benefit in the short and long terms.
privatized service or function should be structured or positioned to
improve via greater efficiency and reduced overheads. A positive
climate for competition, technological innovation and resource
conservation should flow from the sale.
the case of natural monopolies, rather than selling the asset outright,
serious consideration should be given to the privatization of the
management and operations functions on a contractual basis with the
ownership of the asset resting in the public trust. The contracted
management and operations would be required to answer to a publicly
elected Board / Secretariat (Members of Parliament) and in the event of
poor performance could be removed and precluded, without the right of
appeal, from re-bidding for the subsequent contract.
8) The liabilities and assets should be sold as a package i.e. take the bad with the good.
9) All proceeds from sales should be used for debt reduction.
monopolies and cartels ought not be replaced by private ones. Don’t
sell the natural monopoly assets of monopolies - this does not preclude
privatization of all or parts of their operation, repair and
maintenance functions, on a performance based contract.
clause must be included in the sale with the meaning, “at the
discretion of the Crown, in the event the privatized enterprise fails
to provide an adequate level of service, all assets revert to the
Written by Dan Taylor, an entrepreneur living in Toronto, Ontario, Canada. He is an industrial designer and technologist.
advice on e-commerce, the Internet, economic development, high
technology, infrastructure, water and energy issues is actively sought
by leaders in academia, business and government.
© Copyright 1995 Dan Taylor. All rights reserved.