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Difficulty: MediumPublic Corporations: Organization, Commercialization, Privatization, and Control

A state-owned water corporation was reorganized to operate strictly on profit-oriented commercial principles, charging cost-reflective tariffs to cover operational expenses while the federal government retained complete equity ownership of the enterprise. Which public enterprise reform strategy was executed in this scenario?

  1. CommercializationAnswer
  2. B
    Privatization
  3. C
    Nationalization
  4. D
    Indigenization

Answer

Commercialization is the policy reform that reorganizes a public corporation to operate on commercial business principles while the government retains 100% equity ownership.
Commercialization is a governance reform mechanism where state-owned statutory enterprises are reorganized to operate on business principles, achieve cost efficiency, and make profits while remaining fully owned by the state.

Step-by-Step Solution

1
Analyze the enterprise ownership status in the scenario
The government retains complete equity ownership of the water corporation.
Ownership retention distinguishes commercialization from privatisation policies.
2
Examine the operational objective introduced in the scenario
The corporation is restructured for profit orientation, cost recovery, and financial self-sufficiency.
Operating on commercial principles to remove reliance on public subsidies defines commercialization.
3
Synthesize ownership retention with profit-oriented operation
The reform policy illustrated is commercialization.
Commercialization aims at commercial efficiency without divesting government shareholding.

Key Concept

Public Enterprise Reform: Commercialization vs. Privatization
Estimated Time:1m 0s
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Topics

Public Corporations: Organization, Commercialization, Privatization, and Control

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