The process of transferring ownership of a company or assets (for example, power plants, airports, roads, or water treatment facilities) from a government or a government-controlled entity to a privately-owned company. These assets are often transferred to a private entity following a public bidding process. Governments often choose to privatize government-owned assets to obtain much needed revenues and promote efficiency in the delivery of necessary services to their citizens. In some cases, the government may retain certain rights with respect to the privatized company, often in the form of a golden share, to have some control over certain activities of the newly private company.

Privatization is only one of the methods governments use to manage the delivery of these public services. For a discussion of one of these alternatives, public private partnerships, see Practice Note, Public Private Partnerships: Issues and Considerations.