ABSTRACT
During recent decades, despite a tremendous increase in privatisation in almost every sector, public sector activities in general and public infrastructure in particular continue to dominate a large share of the economy in many developing countries. Recent literature has made serious allegations against the public provision of infrastructure, like serious and widespread misallocation of resources, and failures to respond to user demand. Moreover, it is highly criticised by property rights, principal agent and public choice theorists. They argued that SOEs are inherently inefficient. Since the literature does not provide statistically satisfactory evidence, it can be concluded that public ownership is not inherently less efficient than private. However, there are other problems such as fiscal drain due to underpricing, subsidising and overstaffing, inefficient spending and inadequate maintenance, which are common in the public provision of infrastructure. These problems not only reduce the efficiency of infrastructure but also widen the gap between revenue and investment in infrastructure, which in turn adds a burden on the treasury and ultimate on the taxpayers.
