Reform movement Aliran has called on the government not to waste any more taxpayers' money to bail out failed privatised projects, in the wake of yet another such project failure.

Aliran president P. Ramakrishnan told malaysiakini today that the latest bailout of Indah Water Konsortium Sdn Bhd (IWK), sewerage treatment concessionaire, was yet another wastage of public funds running into a billion ringgit.

When public utilities were government-run, especially profitable ones such as Telekom Malaysia, there was no necessity to privatise them in the first place, he added.

"Essential services which benefit the public in general should still be run by the government even if they have to be subsidised, for we are all taxpayers," Ramakrishnan said when commenting on a news report today that the government would take over ownership of IWK from its holding company, Prime Utilities.

Very often, there had been no open tenders on previous privatisation projects, and these projects were passed on to certain politicians' cronies at taxpayers' expense, he added.

Ramakrishnan said the government should now review all privatised projects and those still under consideration and not proceed with any until a comprehensive study has been conducted.

He recalled that before IWK was given the concession to operate the sewerage treatment service, local authorities were doing a "reasonably good job" and the government promised that on privatisation, the service would become more efficient.

"But we know soon after IWK took over the job, household consumers were billed but we did not see any improvement in services," Ramakrishnan said.

In fact, many people had reported to Aliran that the local councils previously undertaking the job were more responsive to complaints.

Ramakrishnan recalled that soon after business tycoon Vincent Tan Chee Yioun secured the sewerage treatment concession from the government, he injected it into Prime Utilities.

Prime Utilities, which is listed on the main board of Kuala Lumpur Stock Exchange, in a statement to the KLSE yesterday said that negotiations with the Ministry of Finance are now at an advanced stage for the government to acquire the entire equity interest in IWK.

A report in The Sun today quoted an identified source at Prime Utilities as confirming that IWK was RM700 million in debt, and that most was owed to the government which had to date pumped in more than RM1 billion.

IWK claimed that it had over 7,000 treatment plants to service, where 2,000 outlets were outdated and it cost up to RM100 million annually to maintain all plants and 220 pump stations. Prime Utilities reported a pretax loss of RM31.64 million last year.

Since taking over sewage treatment services in 1994, IWK had been plagued by numerous problems, according to the Sun report, which also stated that to date, about 41 per cent of its 1.2 million clients still owe IWK RM145 million in arrears.

An indication that the government was tightening its grip on IWK appeared on Feb 4 last year when it became a special shareholder of IWK, bringing in support loans of RM925 mllion.

The daily also reported that the government had in September appointed PricewaterhouseCoopers to conduct a review on the privatised project.

According to an economist analyst, the 1999 annual report of Prime Utilities showed that Vincent Tan still holds substantial interests in Prime Utilities up till April 30, 1999, with direct and indirect interests amounting to some 30 per cent, while another major shareholder is Idris Hydraulic Bhd, another KLSE listed company.

One long standing problem encountered by IWK was the refusal by IWK "clients", including several thousand household consumers, to pay the charges included into the water bills issued monthly or bimonthly.

One such irate "client", M.G. G. Pillai, questioned whether the privatised entity IWK had any legal contract in the first place vis-a-vis the consumers, since the sewerage treatment services were previously handled by the municipal authorities.

Pillai said the latest bailout of IWK was another proof that the government's privatisation programme involving many public utilities was not properly thought out before implementation.

He also referred to the government's bailout of the heavily indebted privatised North-South Expressway project.

The latest bailout of IWK is "just the tip of the iceberg", Pillai said.