Failure of privatization

Failure of privatization

December 18, 2016
Faiz Saleh Jamal
Faiz Saleh Jamal

Faiz Saleh JamalBy Faiz Saleh Jamal
Makkah




THE private sector has many pillars supporting it. Certain factors decide the behavior of private sector establishments and employees. The most important of these is profitability.

The main objective behind the creation of any private sector establishment is to make financial gains for the owners and to increase these gains continuously in every possible manner.

The private sector establishments are profit-making agencies and their primary aim is to increase their profits by making more money. It is not, therefore, surprising that the owners of private establishments seek to run some government facilities in order to increase their profits.

Privatization, which is a partnership between the government and the private sector, is mainly aimed at boosting the standard of services and reducing the costs and burdens on the public budget.

When the government plans privatization, it should consider the profitability aspect of the private sector without giving up on its responsibilities and duties toward the people. Privatization should not, therefore, be at the expense of the citizens or the standard of services provided to them.

On the contrary, privatization should be in favor of citizens with regard to the quality of services and utilities to be privatized without putting any financial burden on them.

However, if we made the profitability of the private sector the main objective behind the privatization process, the cost of services will increase. Sometimes this may lead to the collapse of the entire project like what happened in the privatization of the project to develop the underdeveloped districts.

In the case of the Saher traffic surveillance system, which is the theme of this article, the traffic department and road security had assigned the task of establishing, financing and operating the entire system to the private sector.

This resulted in two things: the Saher cameras did not cover all the roads and traffic signals when it was time to hand over the project to the traffic department.

The second thing was the fraudulent practices of the private companies operating the system. They used to deliberately target motorists in order to to make more financial gains by recording simple mistakes.

The Saher system subsequently failed because we had put on the back of the private sector a heavier load than it could bear. It turned out to be a grave mistake to assign the private sector the task of building and running the system. The companies were also asked to collect the fines for traffic violations.

Instead, the government should have financed the establishment of the system itself instead of assigning it to the private sector.

The government could have easily established and operated the project by itself especially that the establishment of the system coincided with the economic boom and an unprecedented rise in government revenues.

The end result was that we remained on top of the list of countries with high rates of traffic accidents causing many deaths and injuries.

The financial power of the private sector did not help it establish the project properly and cover many roads and streets inside towns and cities with enough surveillance.

The motorists behave well only in the areas covered with Saher cameras, which are few and limited as I mentioned before and only represent a small portion of out roads and streets.

The quest for profitability drove the private sector to use provocative methods in their hunt for the violators.

Exasperated by this method, the drivers took revenge by being more reckless while driving in areas not covered by the Saher cameras making driving on our streets an adventure and nerve breaking to the road users.

The privatization of the project to develop underdeveloped districts which I mentioned before obliged the government to abandon many of its obligations and commitments to protect public interests. The government has preferred the interests of the private sector over the interests of citizens.

The privatization of many projects has failed because the government did not shoulder its responsibilities and duties. The private sector was asked to create the basic infrastructure and to compensate for the confiscation of land, which was beyond its ability. Therefore the project failed.


December 18, 2016
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