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Argentina ordered to pay Suez millions after cancellation of water contract

Argentina has been ordered by the World Bank’s International Center for Settlement of Investment Disputes to pay $405 million to the French transnational Suez for cancelling the corporation’s water and sewage services contract. MercoPress reports, “Suez had originally demanded a settlement of 1.2 billion dollars due to the breach of contract.”

A report by Public Services International Research Unit, the Transnational Institute and Multinationals Observatory provides background on this in their report Here to Stay: Water Privatisation as a Global Trend.

They note, “In May 1993, a consortium led by Suez-Lyonnaise des Eaux started operating a 30-year water supply and sanitation concession in Buenos Aires, Argentina. It was only eight months later that the operating company Aguas Argentinas requested an ‘extraordinary review’ of tariffs, due to unexpected operational losses. Despite tariff increases approved in June 1994, the concession agreement was then renegotiated in 1997 and substantially altered so that little remained of the initial covenant. Not only were new charges introduced and tariffs adjusted, but the concessionaire enjoyed eight additional months to implement the projected investments, and various investments originally agreed upon were either cancelled or delayed.”

They add, “Finally after mounting confrontations, the government cancelled the concession contract and create the public company AySA to immediately take responsibility for the provision of water and sanitation services. …The new public water company AySA under a participatory ownership scheme (the state owns 90% and the workers’ union owns 10%) has brought about positive changes.”

The Buenos Aires Herald reports, “Economy Minister Axel Kicillof has announced the government will appeal the International Center for Settlement of Investment Disputes’ ruling.”

The Blue Planet Project supports the remunicipalization of privatized water services and opposes investor-state provisions in ‘free trade’ and ‘investment protection’ agreements that seek to block allowing water services to return to public control.