Skip to content

NEWS: Auction of Essal shares in Chile suspended

Business News Americas reports, “Chilean water utility Essal will auction the 40.5% stake the government holds in the company on December 16. …Last December, Chile’s government announced it would sell its stake in four water companies to pay for reconstruction following the massive 8.8-magnitude earthquake that struck central-southern Chile in February of that year. …The government raised some US$984mn in June with the sale of 30% of metropolitan utility Aguas Andinas, while the state’s share in Essbio and Esval was sold for US$564mn.” Global Water Intelligence adds, “It is unclear whether majority shareholder IAM – ultimately controlled by Suez Environnement – will step in to buy up the majority of the shares on offer, as this would require it to take on extra debt.”

But Economía y Negocios reports this hour that the auction has been suspended because of the low price offered by investors. “Corfo executive vice president, Hernán Cheyre said, regarding the suspension of the auction: ‘Since the beginning of the public offering of minority assets in water and sanitation companies of Corfo, we were always clear in indicating that the final decision to sell be adopted to the extent that the price offered was attractive to the Corporation.’ He added that this sale will be postponed until better conditions arise in the markets.” That report – in Spanish – is at http://www.economiaynegocios.cl/noticias/noticias.asp?id=91505.

This past summer, the Ontario Teachers Pension Plan (which administers the pensions for 178,000 public school teachers, principals and school administrators, and pays pensions to 117,000 retirees) increased its ownership of Chilean private water utilities Essbio and Esval from 51.1 percent and 69.8 percent respectively to 89.5 and 94.2 percent ownership. There are concerns that the OTPP may seek to purchase the privatized shares in Essal.

Radio.UChile has reported, “The Confederation of Workers of the Province of Osorno, the CUT of Llanquihue, the Consumer Federation of South FECOSUR, the Workers Unions, and the National Federation Essal Fenatraos together oppose the privatization. …Mauricio Navarrete Soto, president of the CUT in Osorno, noted that ‘after the earthquake, the government sold water companies and others such as Essbio, Andean Water, Esval, and is now preparing to sell Essal. It is noteworthy that these services are being remunicipalized around the world, but today in Chile the deepening privatization, which started in 1998, continues.’ …José Pacheco Sanchez, president of Professional and Technical Union of Essal, detailed the benefits if the state remains with the company and stressed that ‘both workers and users are with the hope that the government changes its mind and not to sell 46 percent of the company… The leaders also say that the selling of the shares has not been a transparent process.”

To read a blog – by Mexico City-based Blue Planet Project organizer Claudia Campero Arena – on a protest in Calbuco, Chile against the privatization of Essal, please go to http://canadians.org/blog/?p=11096. The Council of Canadians has repeatedly said that the pension fund for public school teachers should not be invested in private water utilities. To read more about our campaign, go to http://canadians.org/OTPP.