Accra — UK water company Biwater, which was bidding to run Ghana's urban water has been kicked out of a controversial water privatisation by the Government of Tanzania just two years into a ten year contract. The contract was canceled after Biwater made less than half the required investment and failing to improve services in the commercial capital Dar es Salaam.

Development campaigners, the World Development Movement (WDM), have condemned support by the UK Government and the World Bank for the privatisation. The UK Department for International Development (DFID) spent £273,000 from the UK aid budget to pay British consultancy Adam Smith International to produce public relations materials including a pro-privatisation pop video and song to persuade a sceptical Tanzanian public of the merits of the privatisation.

Initially part of an International Monetary Fund (IMF) Structural Adjustment Programme, the privatisation was made a condition for Tanzania receiving debt relief by the World Bank .

WDM today welcomed the decision by the Government of Tanzania to revoke the contract and called on the UK Government to stop supporting water privatisation in developing countries. Head of Policy, Peter Hardstaff today said: "This is yet another example of water privatisation failing to deliver clean water to poor communities. Rich country governments and the IMF and World Bank must abandon their support for this disastrous policy. It is a scandal that the UK aid budget, money that should go to reduce poverty, was used to push water privatisation in Tanzania."

WDM warned Biwater not to attempt to pursue the Government of Tanzania through international courts: "The people of Tanzania must not be punished for being the victims of a failed policy which they did not ask for in the first place. We will oppose any attempt by Biwater to sue the Tanzanian Government," said Hardstaff.

Announcing the decision to cancel the contract on Friday (13 May), Water Minister Edward Lowassa said: "The water supply services in Dar es Salaam and in the neighbouring places have deteriorated rather than improving since this firm took over some two years ago."

"The revocation was made following persistent complaints by city residents over incompetence of the firm."

According to the Government of Tanzania, City Water (the joint venture company involving Biwater) should have invested $8.5 million during the first two years, but so far only $4.1 million had been invested.

Peter Hardstaff said: "This case provides yet another example that the central claim made by supporters of water privatisation, that it is the only way to get the necessary investment, is a myth."

"Biwater's involvement in the Dar es Salaam contract is covered by the UK Export Credit Guarantee Department so the UK taxpayer could end up footing the bill for the UK's disastrous policy of promoting water privatisation in developing countries."