PRIVATIZATIONDevelopment Studies

Course Teacher : Muhammad Bilal Khalid

CONTENTS

• What is privatization ?

• Reasons for privatization

• Privatization in United Kingdom.

• British Airways

• Water Industry

• British petroleum

• British electricity

• British prisons

What is privatization ?

• Privatization is the opposite of nationalism .

• The transfer of ownership of property or businesses from a government to a privately owned entity.

• Raising money.

• Making industry more efficient.

• Spreading share ownership.

Reasons for Privatization

Privatization in United Kingdom

BRITISH AIRWAY

BRITISH AIRWAY• A British Airways Board was established by

the United Kingdom government in 1972 to manage the two nationalized airline corporations.

REASONS BEHIND THE PRIVATIZATION OF BRITISH AIRWAYS

Acquisitions, mergers, cases, regulations, and strikes.

Aver-employment.

Productivity was very low compared to its competitors.

Earnings of BA were declining.

BEFORE AND AFTER PRIVATIZATIONEFFECTS OF BRITISH AIRWAYS

PROFIBILITY:

After privatization their profits boomed.

NUMBER OF EMPLOYEES

salary increase due to privatization.

After privatization it was increased by 31%

MARKET SHARES OF BA

After the privatization of British Airways, market share it improved by 0.50 %

WATER INDUSTRY

•In 1989 water system of U.K was privatized by the Thatcher government

AFTER PRIVATIZATION EFFECTS OF WATER INDUSTRY

•Prices increases 50% in the first 4 years•Pre-tax profits doubled in the first year of the privatization•After privatization number of employees decreased by 21.5%.•The privatization lead to increase in fees , salaries & bonuses

AFTER PRIVATIZATION EFFECTS OF WATER INDUSTRY

•Instead of improving services and investment , the reduction in staff lead to deteriorating of rating services in many areas•The water quality did not improve.•Public health has deteriorated and the pollution of environment has increased•The water industry is no longer a public service but only business to maximize profits.

BRITISH PETROLEUM:

Founded by william knox d`arcy in 1909

Established in 1954 by the government of UK

British petroleum privatized by the government in order to sold its entire share to company by the prime minister of UK (mrs.Thatcher)

The government sold its entire share in several slices between 1979-1987)

This act of privatization was copied around the world and she the baroness thatcher initiated the boom privatization as said by the minister of welfare lord Freud who in an earlier as a banker at Sg Warburg.

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HISTORY OF BRITISH PETROLEUM

MRS.THATCHER(13-OCT-1925---8-APR-2013)

“Fundamental to improving britianseconomic performance”

YEAR OF PRIVATIZATION:

(1979-1987)

CEO AND CHAIRMAIN OF BP

BOB DUDLEY(CEO) CARL HENRIC SAVANBERG(CHAIRMAN

REVENUE:A states annual income from which expenses are met

Operating income:us $6.412 billion(2014)

profit : us $4.003 billion(2014)

Total assets:us $ 284.3 billion(2014)

total equity:us $ 112.6 billion(2014)

Total employes: 85,000

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PRIVATE PRISONS

The 1st privately run prison opened for

business on 6th April 1992.

At present 14 private prisons out of 144 .

The top private companies are 4s justice

services , Serco Custodial services& sudeno.

12.9 % of prisoners population is in private

prisons.

Combined values of contracts is around £ 4

Billions .

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HISTORY OF PRIVATE PRISONS

1980-1990 : Gathering momentum

1990-1998 : Introducing competition

.

1998-2010 : Moving back & forth between

the public and private

2010-present : Deeping and expandind

competition.

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MAIN FACTORS

The cost of private prison is less than the cost

of public prisons

The private prisons are safer , living condition

are good & successful rehabilition of

prisoners into the society

The government dependency on private

prisons should not be increased because it

leads to greater cost

To maintain & ensure the quality &

transparency government should keep check

and balance

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G4S PRISONS

First company to open and run a private prison

They force prisoners to work 40 hours per week

HMP Oakwood is biggest jail

The World Bank Group ▪ Finance, Private Sector, and Infrastructure

Network

THE RESTRUCTING AND PRIVITIZATION OF THE U.K.

ELECTRICITY SUPPLY

The World Bank Group ▪ Finance, Private Sector, and Infrastructure

Network

Central Electrcity Generating Board (CEGB)

Before Privitization

• Playing monoply

• Low productivity growth

• Low return on Assets

• Very expensive Coal & Nuclear Power

• Emissions of Sulfur dioxide & Nitrogen oxides causing acid Rain & Global warming

The World Bank Group ▪ Finance, Private Sector, and Infrastructure Network

AFTER PRIVITIZATION (1990)

AFTER SIX YEARS• Labour productivity doubled• Consumption of coal fell from 74 million ton to 30 million where as the

cosumption of gas increased from 1% to 20%• Ban on Gas for creating electricity was lifted from EU• Over all real unit cost fell by 50%

CEGB

National Power Power Gen Nuclear Electric

Thermal Generating Plant National Grid Nuclear Power

High-Voltage Transmission Network

The World Bank Group ▪ Finance, Private Sector, and Infrastructure

Network

• Net benefits of the restruction & privatization

• Creates more nuclear programs

• Price of export rises

• Clean Enviroment

• Saves cost in Restructuring

The World Bank Group ▪ Finance, Private Sector, and Infrastructure Network

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