It is the process of transferring of ownership property or business from the government to the private sector. Privatization is considered to bring more efficiency and objectivity to the company, something that a government company is not concerned about. In Nepal‚ privatization efforts were initiated in early 1990s from sixth plan.

Objectives of privatization:

  1. Effective mobilization and utilization of resources.
  2. Increase competitiveness of organization.
  3. Government budget improvement.

Methods of Privatization: Following are the methods of privatization:

Assets Sales: Under this method‚ the production and service units and other assets of enterprises are transferred to the private sector in return for a price. Assets are sold through public auctions.

  1. Business sales: Under this method‚ the total ownership of public enterprises is transferred to the private sectors.
  2. Share sales: It involves the transfer of share to the general public‚ employees and private organization.
  3. Management contract: It involves transferred of management right to the private sector for a temporary period of time. The main objective of such process is to improve the productivity of the public enterprises.
  4. Lease assets: Under this method‚ government provides right to the private sector to use the property. It is temporary in nature and private sector should pay the lease amount for its usage.