This report is taken from the PSIRU database. If you have any comments, additions or corrections please contact PSIRU: Email: psiru@psiru.org Fax: +44-(0)208-331-8665 Post: PSIRU, University of Greenwich, 30 Park Row, London SE10 9LS

---

Tucuman water stays public/Workers union takes 10% stake

Sources: No.6236:- Business News Americas 07/12/2001 'GOVT. PULLS THE PLUG ON TUCUMAN WATER CONCESSION - ARGENTINA' LexisNexis (TM) Executive#http://web.lexis-nexis.com/executive/# . No.6237:- Business News Americas 23/02/2001 'WB SPECIALISTS TO CREATE TUCUMAN WATERWORKS STUDY - ARGENTINA' LexisNexis (TM) Executive#http://web.lexis-nexis.com/executive/# . No.6238:- Business News Americas 16/03/2001 'TUCUMAN WATER SERVICES TO GO PRIVATE - ARGENTINA' LexisNexis (TM) Executive#http://web.lexis-nexis.com/executive/#.

In December 2001, the Argentine government decided to scrap previous plans to award a new privatised concession for Tucuman's water system after termination of that awarded to Vivendi's Aguas de Aconquija in 1995. Instead, Sapem - 90% owned by the province of Tucuman and 10% owned by the workers union of OST (Obras Sanitarias de Tucuman) - would manage and operate water services for 30 years.

The Vivendi concession was terminated in 1998 following problems with quality and excess price increases. Since then, Argentina's waterworks promotion and financing agency Enohsa took provisionally control of the system. In February 2001, the World Bank was to send in a team of experts to study how to re-privatise OST while avoiding the pitfalls of the 1995 concession. The study would define a tariff mechanism "to fit in with provincial economic reality", a subsidised system for those who could not afford to pay for the service and a monthly investment plan.

When it became clear that there was no appreciable private sector interest in any new concession due to the problems arising from the 1995 concession to Vivendi, Enohsa set up Sapem and decided to transfer management back to Tucuman provincial authorities, which would have to take on US$ 6.5m of debt accumulated by OST.

According to Enohsa, its decision to desist from privatising OST was caused by the fact that the province had failed to "deliver in time documents relating to a possible concession and a campaign to inform the public of the province's waterworks situation. In addition, a lack of funds seriously affected service quality, in particular