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Profile: Ente Tripartito de Obras y Servicios Sanitarios (ETOSS)
Ente Tripartito de Obras y Servicios Sanitarios (ETOSS) was a participant or observer in the following events:
Aguas Argentinas, a recently formed consortium of private companies, wins a 30-year concession to operate Buenos Aire’s water utility. It is awarded the concession because it promised a greater reduction in water rates than the other bidders. But it was close. Aguas Argentinas’s bid was 26.9 percent, just a fraction higher than the bid of another company, Aguas de Buenos Aires, which offered a rate decrease of 26.1 percent. According to the concession agreement, the company cannot raise rates for at least 10 years (rates have risen 62 percent since privatization was put on the agenda two years ago (see 1991-1993)). Additionally, it must invest $1.4 billion in the system, and connect more than 4,200,000 people to water and 4,800,000 to sewage systems. The foreign stakeholders in Aguas Argentinas include French companies Compagnie Générale des Eaux (later known as Vivendi; 8 percent), Lyonnaise des Eaux (later known as the Suez Group; 25.3 percent), Sociedad General de Aguas de Barcelona (12.6 percent), and Anglian Water (4.5 percent). The remaining stakes are held by Argentine companies Bank of Galicia (8.1 percent), Grupo Meller (10.8 percent), and Sociedad Comercial del Plata (20.7 percent). Grupo Meller is run by Sergio Meller, a supporter of Argentine President Carlos Menem, and Sociedad Comercial del Plata is owned by businessman Santiago Soldati, another close ally of Menem. [Santoro, 2/6/2003]
Argentine President Carlos Menem issues a decree placing his political ally Secretary of the Environment Maria Julia Alsogaray in charge of ETOSS, the government regulatory body that provides oversight of Aguas Argentinas. Critics say the move is aimed at protecting Aguas Argentinas from public accountability. [Public Citizen, 6/14/2007]
Aguas Argentinas, a privately owned company that provides the city of Buenos Aires with its water supply, petitions the newly established government authority, ETOSS, for a rate increase of 13.5 percent. The company had previously agreed not to seek any rate increases for 10 years (see April 28, 1993). But according to Carlos Ben of Aguas Argentinas, “What was said in 1993, that there was not going to be an increase in rates for 10 years, was not meant in absolute terms. It was to indicate to the bidders that they should not put a speculative number [on rate reductions]. There was not a presumption of a freezing of rates.” [Santoro, 2/6/2003] The company also claims that it has suffered $23 million in losses because of “extra-contractual costs,” such as speeding up service in very poor neighborhoods. ETOSS, whose operations are financed through the collection of 2.6 percent of Aguas Argentinas’ revenue, approves the request on the condition that the company expedite expanding water and sewage service to the “villas de emergencia” (shanty towns), and that it implement a plan to eliminate the use of well water, which is heavily contaminated with nitrates. [Santoro, 2/6/2003; CBC News, 3/31/2004; Public Citizen, 6/14/2007] A decade later, Menahem Libhaber, the chief water and sanitation engineer for the World Bank in Latin America, will tell the International Consortium of Investigative Journalists that false promises are simply part of the game. “You get into the business with low rates or high commitments—all the while telling yourself, ‘When we are in we will renegotiate,’ The public sector has to be aware,” he says, that companies are disingenuously putting their best foot forward. “Sometimes it’s a game to get into the business.… And they [the companies] have leverage once they are in.” [Santoro, 2/6/2003]
Aguas Argentinas and the regulatory body that governs it, ETOSS, come to an agreement on the controversial $800 water and sewer connection fee (see Spring 1996). The company will lower the connection fee to $200, but create a new “Universal Service” fee that all of its customers must pay. In agreeing on the fee, ETOSS essentially allows the company to impose a fee that had not been specified in the 1992 concession agreement (see December 9, 1992). An investigation by the International Consortium of Investigative Journalists will later point out, “The real winner was Aguas Argentinas. It had succeeded in imposing fees not described in its contract.” [Santoro, 2/6/2003]
The head of ETOSS, the regulatory agency that oversees the management of Buenos Aires’ privatized water and sewer utility, tells Congress that Aguas Argentinas has only built a third of the new pumping stations and underground mains it promised to complete by 1997. Moreover, it has only spent 9.4 million of the promised 48.9 million in improving the sewage system. Citing the supposed need for “further investigation,” the company has put off construction of the Berazategui wastewater treatment plant. As a result, sewage is being dumped into rivers and cesspools, raising nitrate levels in the water (nitrates reduce the flow of oxygen to the brain in infants) and increasing the risk of various waterborne illnesses. According to the World Bank, by delaying the project, Aguas Argentinas is saving $100,000 dollars a day. [Inter Press Service, 4/13/1993]
Aguas Argentinas, the private company that is managing Buenos Aires’ water and sewer services, asks ETOSS, a government regulatory agency, to raise water rates by 11.7 percent. When ETOSS approves only a 1.61 percent increase, the company turns to Secretary of the Environment Maria Julia Alsogaray, who then persuades President Carlos Menem to authorize a 5.1 percent rate hike. It eventually turns into a 17 percent increase. When a judge freezes a portion of the rate hike, the government successfully appeals. [Santoro, 2/6/2003] Aguas Argentinas’ original 1992 contract with Argentina had stipulated that the company could not raise rates for at least ten years (see December 9, 1992). This is the second such increase in rates (see also (Early 1994)).
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