The Benefit of Privatize the Electricity Sector

Electricity Privatilized

As we all know, electricity has been essential for many years for the development of many technologies, but also for the comfort and ease of daily activities for all of us.

Because of the importance of electricity, it is necessary that the electrical service be of excellent quality, and that it does not have sudden interruptions.

It is even the main reason why electric service should belong to private industry.

Why Electricity Should Be Privatized

Of course, privatization is certainly a complicated issue, and it is a topic of discussion in many countries.

Privatizing electricity has both negative and positive consequences. And certainly privatization, despite having different negative aspects, could work. Because in this way electricity can be produced without problems, and it will contribute to development.

Privatization is also a controversial issue in many countries today, and this is due to the negative consequences that this action could generate.

Criticism of the privatization of the electricity sector

Because of this, there are three specific reasons that make the privatization of the energy sector not so feasible:

1 Unemployment

Maybe it’s a little illogical to think about this, but it could happen. Many people who previously worked in government companies (before electricity was privatized) would become unemployed.

But this would be in the short term. And looking at privatization from another perspective, it would also generate new jobs, even if some people become unemployed.

2. Monopolization

It could become a monopoly, as a single private company would be in control of the others. As well as control of resources and income.

So, this indicates that privatization could have problems both for the government, and for other companies. Since they would be under the control of a single private company. Simply because electricity is so important.

3. More pollution for more production

Because there would be more competition in the electricity market, there will also be large externalities.

Competitive energy production would suggest that companies would need low-cost energy sources, such as coal and other forms of generating this energy that tend to have a rather negative impact on pollution, and furthermore, it would not be something we could control, as it is a private company. Although it could be subject to different controls and regulations.

With central power generation systems we can push for renewable and sustainable forms of energy production.

Reasons to privatize electricity

There are many reasons for privatising the electricity sector. The main reason is the improvement in electricity service, better quality.

Here are some of the main reasons why the privatization of the electricity sector is necessary:

1. More accessible tariffs

Electricity should be privatized because that would probably mean better rates for the general public.

This would happen because there would be more companies in the business. When more companies come into a business, there is more competition. More competition generally means lower prices. So, privatization of electricity would be very beneficial!

This is something that happens in many countries where the electricity sector is public. Venezuela, as well as many other countries, suffers from constant electricity service failures and this is simply because the company does not have sufficient capacity to generate electricity.

This does not happen in private industry, as privatization seeks to improve the quality of service.

3. Better quality, stability and development

As mentioned above, the main objective of privatization is to meet the needs of all people, offering the best quality of service.

Starting with infrastructure, it is necessary to invest in the electricity sector, to improve quality, so that such investment directly benefits all people who use the electricity service.

By improving the infrastructure, the stability of the electricity service will improve, of course, there will be no more cuts or limitations on the use of electricity, since there will be a greater capacity for electricity generation. And what matters to the private sector is that you use their services as much as you can, to generate more money.

Conclusion

Privatization of electricity could work in some countries, although it is important that regulations are put in place, as it could be “dangerous” for a private company to control a country’s electricity.

It is also necessary that more than one private company be able to offer this service, as this would be a way of easily controlling the market, lowering prices, increasing competition and thus making more profit.

It must be clarified that not all countries are prepared to privatize the electricity sector.

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