ARGENTINA: GOVERNMENT RESCINDS CONTRACT WITH AGUAS ARGENTINAS, RENATIONALIZES WATER SERVICE.
Argentine President Nestor Kirchner has announced that the government has rescinded its contract with Aguas Argentinas (AA), the private company in charge of providing water service to the greater Buenos Aires metropolitan area. This is the fourth major deprivatization or renationalization of a private company that Kirchner's government has conducted under a policy of retaking government control of utilities that had been sold to private interests during the 1990s. The companies that made up AA are seeking financial remuneration in international tribunals and French-Argentine relations have become somewhat strained, since French companies Suez Lyonnaise des Eaux and Veolia Environnement--previously known as Vivendi--were the main losers in the decision to end the contract.
Kirchner: inadequate service, contamination, high rates
The government's rationale for ending its dealings with AA was primarily that the company had not provided service to enough Argentines and that the water it was delivering in many areas was excessively contaminated with nitrates. Users and the government complained about prior rate hikes, and a 2002 freeze on water rates become an intractable source of fury for water-company executives.
The government announced that the company was guilty of multiple instances of "contractual incompliance" and that there were "extremely elevated levels of nitrate in the water" that it was supplying to the southern region of Greater Buenos Aires.
To replace Aguas Argentinas, the government has established Aguas y Saneamiento Argentinos (AySA) to supply the megacity of Buenos Aires and its surrounding area. Supplying Greater Buenos Aires means AySA will have to service nearly a third of the country's entire population in the city proper and its 17 surrounding districts. The government will hold 90% of the company's stock.
The government announced a 400 million peso (US$130 million) investment plan to overcome the problems of the previous system. US$13 million will be aimed at projects to expand service through the oversight of neighborhood cooperatives and organizations that, for the most part, answer to Undersecretary of Lands Luis D'Elia, a former piquetero (jobless people) movement leader.
US$47 million will set up a series of projects to replace wells contaminated with nitrates and to increase the production of water treatment plants. Other projects include constructing adequate sewerage.
Planning Ministry officials expect to set up a business...
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