Encouraging Private Sector Participation



Government Perspectives

Only governments are in a position to predict the extent of reform and restructuring that is politically feasible. Many governments have succeeded in attracting private participation to the rail sector by thoroughly assessing government goals and objectives, developing a comprehensive strategy for private participation, and establishing a legal and regulatory framework to achieve the goals and objectives.

Success in private participation in the rail sector expands as more assets and services are exposed to private participation and management. Simple outsourcing of services—catering, construction, building maintenance, and so forth—yields the least participation. The highest level of participation emerges from complete sector-wide restructuring, which produces full complex privatization that offers the potential for a range of private sector specialist companies to develop. Many countries have a vibrant rail sector comprising multiple private enterprises that supply manufacturing, maintenance, operating, retail, and other services to private businesses operating in the sector.

Government must determine the degree of restructuring and private sector participation by assessing national goals and objectives, and then developing a road-map for the required changes, which will include some of the following.
  • Identify essential public services that must be retained
  • Select a desired industry structure; create a preliminary plan
  • Determine what extent of private control ifs permitted in infrastructure
  • Develop required legal and regulatory changes
  • Develop criteria for resolving labor issues
  • Develop a road map to restructure the sector—functions, timing, investment needs, potential investors, and so forth.
The case studies presented in this toolkit, and other resources of the World Bank and other development banks can provide examples. Many governments work with development banks to hire consulting firms that will help them work through a rail reform road-map.

    
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