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Context of 'May 1998: Aguas Argentinas Raises Water Rates Again'

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After the decision is made to privatize Obres Sanitarias, Buenos Aire’s public water and sewer utility, rates climb 62 percent. Additionally, the utility introduces an 18 percent sales tax. [CBC News, 3/31/2004; Public Citizen, 6/14/2007]

Entity Tags: Obres Sanitarias de la Nacion

Timeline Tags: Water

Aguas Argentinas, a recently formed consortium of private companies, wins a 30-year concession to operate Buenos Aire’s water utility. It is awarded the concession because it promised a greater reduction in water rates than the other bidders. But it was close. Aguas Argentinas’s bid was 26.9 percent, just a fraction higher than the bid of another company, Aguas de Buenos Aires, which offered a rate decrease of 26.1 percent. According to the concession agreement, the company cannot raise rates for at least 10 years (rates have risen 62 percent since privatization was put on the agenda two years ago (see 1991-1993)). Additionally, it must invest $1.4 billion in the system, and connect more than 4,200,000 people to water and 4,800,000 to sewage systems. The foreign stakeholders in Aguas Argentinas include French companies Compagnie Générale des Eaux (later known as Vivendi; 8 percent), Lyonnaise des Eaux (later known as the Suez Group; 25.3 percent), Sociedad General de Aguas de Barcelona (12.6 percent), and Anglian Water (4.5 percent). The remaining stakes are held by Argentine companies Bank of Galicia (8.1 percent), Grupo Meller (10.8 percent), and Sociedad Comercial del Plata (20.7 percent). Grupo Meller is run by Sergio Meller, a supporter of Argentine President Carlos Menem, and Sociedad Comercial del Plata is owned by businessman Santiago Soldati, another close ally of Menem. [Santoro, 2/6/2003]

Entity Tags: Grupo Meller, Anglian Water, Aguas de Barcelona, Bank of Galicia, Ente Tripartito de Obras y Servicios Sanitarios, Sociedad Comercial del Plata, Suez Group, Obres Sanitarias de la Nacion, Compagnie Générale des Eaux, Sociedad General de Aguas de Barcelona

Timeline Tags: Water

Buenos Aires’ public water utility, Obras Sanitarias, is privatized under heavy pressure from the World Bank, the IMF, and the US government. It is taken over by Aguas Argentinas, a recently formed consortium of private companies that won a 30-year concession to manage the city’s water and sewage system (see December 9, 1992). The deal represents the largest transfer in history of a water service and watershed to the private sector. The consortium will be responsible for providing water to the residents of Buenos Aires and 14 surrounding municipalities—some 10 million people (see also 1980s-1993). Oversight of Aguas Argentinas will be conducted by the newly formed regulatory body, ETOSS (Ente Tripartito de Obras y Servicios Sanitarios). Its task will be to monitor the quality of service, represent customers, and ensure that the company fulfills the terms of its contract. [Inter Press Service, 4/13/1993; Santoro, 2/6/2003; CorpWatch, 2/26/2004; CBC News, 3/31/2004; Public Citizen, 6/14/2007]

Entity Tags: Aguas Argentinas

Timeline Tags: Water

Aguas Argentinas, a privately owned company that provides the city of Buenos Aires with its water supply, petitions the newly established government authority, ETOSS, for a rate increase of 13.5 percent. The company had previously agreed not to seek any rate increases for 10 years (see April 28, 1993). But according to Carlos Ben of Aguas Argentinas, “What was said in 1993, that there was not going to be an increase in rates for 10 years, was not meant in absolute terms. It was to indicate to the bidders that they should not put a speculative number [on rate reductions]. There was not a presumption of a freezing of rates.” [Santoro, 2/6/2003] The company also claims that it has suffered $23 million in losses because of “extra-contractual costs,” such as speeding up service in very poor neighborhoods. ETOSS, whose operations are financed through the collection of 2.6 percent of Aguas Argentinas’ revenue, approves the request on the condition that the company expedite expanding water and sewage service to the “villas de emergencia” (shanty towns), and that it implement a plan to eliminate the use of well water, which is heavily contaminated with nitrates. [Santoro, 2/6/2003; CBC News, 3/31/2004; Public Citizen, 6/14/2007] A decade later, Menahem Libhaber, the chief water and sanitation engineer for the World Bank in Latin America, will tell the International Consortium of Investigative Journalists that false promises are simply part of the game. “You get into the business with low rates or high commitments—all the while telling yourself, ‘When we are in we will renegotiate,’ The public sector has to be aware,” he says, that companies are disingenuously putting their best foot forward. “Sometimes it’s a game to get into the business.… And they [the companies] have leverage once they are in.” [Santoro, 2/6/2003]

Entity Tags: Aguas Argentinas, Carlos Ben, Ente Tripartito de Obras y Servicios Sanitarios

Timeline Tags: Water

Aguas Argentinas and the regulatory body that governs it, ETOSS, come to an agreement on the controversial $800 water and sewer connection fee (see Spring 1996). The company will lower the connection fee to $200, but create a new “Universal Service” fee that all of its customers must pay. In agreeing on the fee, ETOSS essentially allows the company to impose a fee that had not been specified in the 1992 concession agreement (see December 9, 1992). An investigation by the International Consortium of Investigative Journalists will later point out, “The real winner was Aguas Argentinas. It had succeeded in imposing fees not described in its contract.” [Santoro, 2/6/2003]

Entity Tags: Ente Tripartito de Obras y Servicios Sanitarios, Aguas Argentinas

Timeline Tags: Water

Aguas Argentinas, the private company that is managing Buenos Aires’ water and sewer services, asks ETOSS, a government regulatory agency, to raise water rates by 11.7 percent. When ETOSS approves only a 1.61 percent increase, the company turns to Secretary of the Environment Maria Julia Alsogaray, who then persuades President Carlos Menem to authorize a 5.1 percent rate hike. It eventually turns into a 17 percent increase. When a judge freezes a portion of the rate hike, the government successfully appeals. [Santoro, 2/6/2003] Aguas Argentinas’ original 1992 contract with Argentina had stipulated that the company could not raise rates for at least ten years (see December 9, 1992). This is the second such increase in rates (see also (Early 1994)).

Entity Tags: Carlos Menem, Ente Tripartito de Obras y Servicios Sanitarios, Maria Julia Alsogaray, Aguas Argentinas

Timeline Tags: Water

Aguas Argentinas signs a new contract with Argentina for the management of Buenos Aires’ water and sewer services. In negotiating the new contract, the company enlisted the support of Argentine President Carlos Menem. Additionally, it threatened not to invest any more funds into expanding water and sewer access to poor neighborhoods until the new contract was signed. The new agreement significantly reduces the company’s obligations to Buenos Aires. The original 1992 concession agreement (see December 9, 1992) required Aguas Argentinas to invest $1.4 billion in the system, and connect more than 4,200,000 people to water and 4,800,000 to sewage systems, which the company has failed to do. While the company says it currently collects 62 percent of its customers’ sewage—just shy of its commitment of 64 percent—the actual percentage of sewage that it treats is only 5 percent. The rest is dumped untreated directly into the Rio de la Plata (River of Silver). The new contract allows the company to delay construction of the crucial Berazategui wastewater treatment plant as well as a fourth sewer main. It also eliminates the requirement that rate increases be tied to investments and waives $10 million in fines that were imposed for alleged contract violations. Additionally, the contract pegs rate increases to fluctuations in the US inflation rate, calculated in pesos. [Santoro, 2/6/2003]

Entity Tags: Carlos Menem, Aguas Argentinas

Timeline Tags: Water

The Argentine government approves Aguas Argentinas’s request for another hike in water rates (see also (Early 1994) and May 1998). This time the rates increase by 9.1 percent. In exchange, the company says it will expedite its plan to spend $1.1 billion expanding services to Buenos Aires’ poorer neighborhoods. [Santoro, 2/6/2003]

Entity Tags: Aguas Argentinas

Timeline Tags: Water

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