Aguas Provinciales de Santa Fe

Cancelled

Failure

In August 1995 the provincial government of Santa Fe awarded a 30-year concession for its water and sewerage systems to the Aguas Provinciales de Santa Fe (APSF) consortium. APSF supplied water to some 1.8 million residents and collected sewage from 1.25 million people living in 15 districts of the Sata Fe province. Most of the customers lived in the cities of Rosario and Santa Fe. The consortium committed to invest about $1 billion over the lifetime of the contract to achieve specific service goals. Half of the investment was supposed to come in the first 10 years of the concession. The APSF consortium was led by Suez Lyonnaise des Eaux (later renamed SUEZ), which held a 34% stake in the company. APSF won the concession contract following a competitive tender judged by a lowest tariff per cubic meter criterion. In 1995 the remaining APSF shares were divided as follows: Aguas de Barcelona (18.2%) and 3 Argentinian companies, Meller S.A. (10.7%), Banco de Galicia y Buenos Aires (13.3%), and Sociedad Comercial del Plata (21.3%). The ownership of APSF at year-end 2002 had changed to: SUEZ (51.7%), Interagua (14.9%), Banco de Galicia y Buenos Aires (12.5%), Agbar (10.9%) and ASPF workers (10%). In February 2006, a new state-owned company Aguas Santafesinas (ASSA) took over water and sewerage services in 15 cities in the south of Argentine province Santa Fe, replacing the concessionaire Aguas Provinciales de Santa Fe. Aguas Santafesinas was owned by the provincial government (51%), the 15 municipalities were expected to hold 39%, with the employees controlling 10%. In 1997 APSF reached financial closure on a $300 million investment, with $85 million in debt arranged by Dresdner Bank and Credit Lyonnaise. Banco Interamericano de Desarrollo granted Aguas Provinciales de Santa Fe a $85 million credit with $70 million scheduled for investment in 1997. A World Bank loan financed the privatization process and provided $29.4m for immediate, urgent investments before the consortium took over. In Jun. 2000, the IFC approved a US$ 55 million financing package for the company: US$ 20 million in direct loan, US$ 5 million in equity investment and US$ 30 million in syndication. APSF was hurt by the Argentinian currency devaluation of 2002, when the Peso fell to about one third of its previous value. The local government refused to allow tariff increases to compensate for the Peso devaluation, making it impossible for APSF to meet its financial commitments. In 2003, Aguas Provinciales de Santa Fe and Suez filed a claim against the Argentinean government with an international arbitration tribunal (International Centre for Settlement of Investment Disputes - ICSID). They claim compensation for some $310 million invested in Argentina. On January 31 2006, the governor of Santa Fe signed a decree to rescind the concession contract of Aguas Provinciales de Santa Fe. Suez withdraw in April/may 2005. Provincial government was looking for new investors as of Aug 2005. The contract was finally canceled in Feb.3 2006 http://www1.ifc.org/ar2002/pdf/FY2002Commitments.pdf For further updates on the claim under international arbitration, check http://www.worldbank.org/icsid (case n. ARB/03/17). None

Water and sewerage

Argentina

World Bank Group

Project

Water Supply and Storage, Government, Power Transmission, Waste Processing and Treatment, Commercial, Power Generation (CCGT)