Technical networks’ ownership, governance and procurement
Herrala, Maila; Pakkala, Pekka; Haapasalo, Harri (2011-02-11)
Communities’ technical networks such as electricity, heating, water, sewage, telecommunications and transport networks have traditionally been owned and operated by public sector. Current economic theories and market situation, however, argues that many public utilities and services can be delivered more efficiently when private sector is involved or when fully privatised. Privatisation, public ownership and public-private partnerships have all found their supporter and opponents over the years. The literature related to ownership and governance of technical networks is, however, patchy and sector and mode specific.
This paper presents a literature review on models considered to be suitable for arranging technical networks ownership and governance. It concentrates on defining and modelling the different ownership and governance structure variants and models for technical networks. Objective is to create a coherent picture of the different ownership models, their prerequisites, disadvantages and benefits and the structural changes made during the 20th century. It describes different alternatives from which the municipalities and state authorities are able to determine the preferred structure for each situation. Different approaches should be analysed and weighted in order to find the best possible solution. It has been observed that one size does not fit all and one needs to carefully make conclusions before undertaking any paradigm change.
This research is part of a more extensive research project named C-Business – Communities’ technical networks ownership, governance and operation, which aims to investigate the pros and cons of different ownership and governance models of communities’ technical networks. The project assesses the public and business risks of different O&G models and defines a common frame — business architecture — to these models. It further attempts to point out the weak and strong points of both market-oriented and public models of the networks, and to identify prospective business potential in operating and owning the networks. This paper gives a good starting point for further research in the area of ownership, governance and partnerships.
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