Key Stages of Privatisation

1. Reviewing Options and Preliminary Planning

b) Evaluation of options

Feasibility study

At this point it is sensible for the Government to undertake a feasibility study, which investigates whether it is possible in practical terms to privatize the enterprise, and whether their objectives are likely to be fulfilled by privatisation.

If the study concludes that privatisation will be an effective way of fulfilling the various objectives for the enterprise then it should also provide recommendations about which method or methods would be most suitable with these goals in mind.

If it concludes that privatizing the enterprise is for some reason not feasible or not the best way of meeting the objectives then it should also provide advice about other steps the Government could take towards them but while keeping the enterprise in state control.

Role of SAI/reference to previous SAI reports

When carrying out the feasibility study the Government may benefit from consulting reports of previous privatisations made by the SAI (Supreme Auditing Institution) in their country, or if no such privatisations or reports have been carried out in their own country they may consider asking another government for permission to view audits made about privatisations in that country.

Although the situations are bound to be somewhat different the broad issues are likely to be similar. Consulting such reports can be of great assistance to the Government, in presenting both an idea of what to expect from various different methods of privatisation and of problems which have arisen in various privatisations in the past, which may help the government to plan for them if they do decide to privatize.

Reports from auditing organizations have one advantage over a government’s own reports in that they are carried out from a completely independent and objective standpoint, and so present a picture which is hopefully freer of political interests than a government report.
After considering all the relevant reports and studies the government will eventually decide if privatisation is the best course of action, and if so which method is most suitable for the situation in hand.

Next: Pre-Sale Considerations

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