Water privatization in Argentina

The privatization of water and sanitation services in Argentina between 1991 and 1999 under the government of Carlos Menem was part of one of the world's largest privatization programs. Water and sanitation concessions with the private sector were signed in 28% of the country's municipalities covering 60% of the population.

The highest profile concession was signed in 1993 with a consortium led by the French firm Suez for the metropitan area of Buenos Aires. After the 2001 economic crisis, under the government of Néstor Kirchner, many concessions were renegotiated. Some were even terminated and the responsibility for service provision reverted to public entities, as it was the case in Buenos Aires where the newly created public enterprise Aguas y Saneamientos Argentinos took over the responsibility for service provision in 2006.

At the beginning of 2008, the government of the Province of Mendoza announced that it is interested in increasing its control of the provincial water utility Obras Sanitarias de Mendoza, of which it owns 20%, buying another 20% from Saur International.

So far there has been no comprehensive, objective assessment of the impact of private sector participation in water supply and sanitation in Argentina. However, there has been some partial evidence. For example, a 2002 study assessed the impact of privatization on child mortality based on household survey data, finding that in the 1991–1997 period child mortality fell 5 to 7 percent more in areas that privatized compared to those that remained under public or cooperative management. It also found that the effect was largest in poorest areas (24%). The authors estimate that the main reason is the massive expansion of access to water, which was concentrated in poorer areas that did not receive services before private sector participation was introduced.

The largest and best-known case of private sector participation in the Argentinian water and sanitation sector was the Buenos Aires concession, signed in 1993 and revoked in 2006. Its impact remains controversial.

Critics argue that the concessionaire failed to achieve the targets set under the concession contract. When the government rescinded the concession in March 2006, it argued that Aguas Argentinas did not comply with obligations concerning expansion and quality. According to the government, the supplied water had high levels of nitrate, pressure obligations were not kept and scheduled waterworks were not executed by the concessionaire. Proponents of private participation state that a freeze in tariffs at the time of the devaluation of the peso during the Argentinian economic crisis in 2001 substantially reduced the real value of tariff revenues and thus made it difficult to achieve the original targets.

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