The court ruled in favour of 11 consumer-protection advocates who alleged the Thaksin administration's handling of the privatisation process was ridden with irregularities and conflicts of interest involving government leaders and big businesses who were acting in collusion to take over the state power company.

The petitioners also argued that the privatisation, if allowed to go ahead, could hurt consumers because it would enable corrupt politicians and prospective Egat shareholders unchecked power to profiteer at the expense of consumers by hiking electricity rates, among other things.

Specifically, the court said at least one member of the government's committee charged with overseeing the privatisation plan was a close associate of Thaksin or other government leaders, raising suspicions of a conflict of interest - not to mention failure by the government to observe rules and regulations under its own master plan for the privatisation of state enterprises.

The court also ruled that certain types of assets controlled by Egat, such as land expropriated for construction of hydroelectric dams, could not be legally transferred to Egat Plc, the proposed successor of the state power company under the privatisation plan.

The government is bound by the Constitution to follow the orders of the Administrative Court, which provides citizens and juristic persons an effective appeal against irregular administrative acts by the government.

The initial public offering for the shares of Egat Plc, set for November 16-17 last year, was halted when the court accepted the consumer-protection advocates' petition and issued an injunction against the planned listing of Egat on the Stock Exchange of Thailand.

The court's decision brought the Thaksin government's credibility in the eyes of international and local investors to a new low. Investors had been promised a favourable investment climate and a much more vibrant stock market as the result of the Egat IPO, billed as the country's biggest listing ever.

According to the Thaksin administration, the planned privatisation of Egat and proposed listing of other state enterprises would raise the SET's total market capitalisation to Bt10 trillion, up from the current Bt5 trillion in five years. It is now unlikely that Thaksin's promise to stimulate stock-market growth can be fulfilled.

It has also become clear that the court's ruling against the Egat listing will set a legal precedent for the privatisation of other state enterprises.

Partial or outright privatisation of state enterprises in Thailand has been a long standing policy of successive administrations not only as part of official efforts to improve efficiency, encourage competitiveness, and promote trade liberalisation, but also to reduce the government's exposure to long-term financial liabilities. In principle, progress in the privatisation of state enterprises is a yardstick against which the health of a country's free-market economy can be measured.

But the Thaksin administration has failed to dispel public doubts about the way Egat shares would be distributed, how safeguard mechanisms would prevent the bulk of shares falling into the hands of opportunistic politicians and their cronies once the stock was listed, and concerns about the absence of a truly independent regulatory body to ensure fair competition in the energy sector and a reliable supply of power at reasonable prices.

The Supreme Administrative Court should be commended for its decision, which not only ensures that the public interest is being upheld but also for raising the benchmark of standards of transparency and public accountability against which future governments' privatisation plans will be judged.