WasteBox PLC was created five years ago when the capital city’s rubbish collection service was privatised. As a public sector enterprise, the organisation had been overstaffed and inefficient, but charges for collecting waste were low and the service was popular with local residents. The city government subsidised the waste services and this helped to keep charges down. Shortly after privatisation, the directors announced substantial job cuts to save on costs. The waste collection service was reduced to once a week, yet charges were increased. The city government also announced that the city’s rubbish collection services would be opened up to competition.

The business started to make big profits. It invested in new equipment and paid dividends to its shareholders. Last year, for the first time since privatisation, profits fell. This was due to competition from a newly formed waste disposal business. Many of WasteBox’s shareholders wanted the directors to be replaced. The biggest shareholders demanded to be on the board of directors. The chief executive discussed with the bank whether a loan could be obtained to enable him to buy out most of the shares to convert the business into a private limited company. He told the bank manager, ‘If I turn the business into a private company, I can run it without any interference from big shareholders and publish less data about the company.’

The government still owns and manages the old and inefficient waste recycling plant in the city. It now wants to involve WasteBox in a public–private partnership to build a new, environmentally friendly waste recycling plant. The business would be asked to invest capital in the new facility and to use its private sector managers to help manage the new plant. A PPP would help to make sure that it was built quickly. However, some local residents are worried that private sector managers would try to cut costs, and that difficult-to-recycle waste would simply be dumped in the local river.