1 / 33

History of Aguas Argentinas 1993 - 2005

History of Aguas Argentinas 1993 - 2005. Composition of the shareholders in Aguas Argentinas. The Aguas Argentinas concession.

eve
Download Presentation

History of Aguas Argentinas 1993 - 2005

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. History of Aguas Argentinas 1993 - 2005

  2. Composition of the shareholders in Aguas Argentinas

  3. The Aguas Argentinas concession May 1993 saw the State grant a 30-year licence to Aguas Argentinas to manage drinking water and sewerage services for the city of Buenos Aires and 17 sections of the greater Buenos Aires area. 10 million people are housed in this area. Concession area 1,830km2 Serviced area 1,070km2 SAN FERNANDO SAN ISIDRO VICENTE LOPEZ TIGRE AVELLANEDA QUILMES CITY OF BUENOS AIRES SAN MARTIN LANUS 3 FEBRUARY LOMAS DE ZAMORA HURLINGHAM ALTE. BROWN MORON LA MATANZA ITUZAINGO Note: Radius served with drinking water and sewerage system. April 2005 E. ECHEVERRIA RADIUS SERVED WITH DRINKING WATER RADIUS SERVED WITH SEWERAGE SYSTEM RADIUS SERVED WITH DRINKING WATER AND SEWERAGE SYSTEM AREA TO SERVE BY 2023 RURAL AREA OR WITHOUT DEFINED DIVISION OF LAND EZEIZA

  4. The model concession Long-term collaboration • PRIVATE OPERATOR • Manages the service efficiently • Maintains and expands the infrastructure (which remains the property of the State at all times) • STATE • Sets the objectives • Establishes the resources • Controls and regulates Flexible system Provides for 5-year review, with attention to developments in the environment Aims and objectives contract (Investments not completed may only be considered as non-fulfillment inasmuch as they do not allow the company to meet the objectives stated in the Service Improvements and Expansion Plan)

  5. The concession's achievements

  6. Achievements Investments totalling US$1,700 million between 1993 to 2001 in excess of US$200 million per year, a level previously unheard of in the history of the ex OSN 6,000KM OF NEW NETWORKS 2,000KM OF REHABILITATED NETWORK DRINKING WATER 2 MILLION INHABITANTS COVERED SEWERAGE SYSTEM 1 MILLION INHABITANTS COVERED

  7. Huge transformation 10 YEARS AGO 1 MAY 1993 10 YEARS LATER

  8. Huge transformation: Change statistics Water production Population served Network length Volume in thousands of m3 per day Network length - in km in thousands of inhabitants 4.090 15.817 Drinking water 7.767 Drinking water Sewerage system Sewerage system 11.910 5.821 3.714 5.535 9.294 4.557 7.200 OSN (1993) Aguas Argentinas (2001) OSN (1993) Aguas Argentinas (2001) OSN (1993) Aguas Argentinas (2001) Coverage Water quality Losses in the network Percentages (%) Percent of inhabitants (%) Percentages not meeting standard (%) 47% 83% Drinking water Turbidity 50% Sewerage system Bacteriology 65% 34% 62% 54% 8% 2% 0% OSN (1993) Aguas Argentinas (2001) May 1994 Aguas Argentinas (2001) OSN (1993) Aguas Argentinas (2001)

  9. EXTENSION OF THE SOUTH-WEST WASTEWATER TREATMENT PLANT CONSTRUCTION OF THE NORTH WASTEWATER TREATMENT PLANT EXTENSION OF THE BELGRANO DRINKING WATER FACILITY Most important works These primary infrastructures are capable of supporting a significant portion of the expansion projects planned for the future. CONSTRUCTION OF THE SAAVEDRA - MORON SUBTERRANEAN RIVER

  10. Reduce network losses Reducing network losses has resulted in savings of 1,000,000m3 of drinking water per day. This is equivalent to the production of drinking water for the cities of Cordoba and Rosario combined. Losses* - 25% 32% 44% * In 2003, the company exceeded the goals set forth in the Concession Contract.

  11. OSN (1992) (in WCM - water column meters) AGUAS ARGENTINAS (2002) (in WCM - water column meters) AVERAGE PRESSURE HEIGHT 5.5 WCM AVERAGE PRESSURE HEIGHT 9.3 WCM Lack of water and pressure are a thing of the past, except in very rare cases Less than or equal to 6 WCM Between 6 - 9 wcm Greater than 9 wcm

  12. The resulting water quality has substantially improved Aguas Argentinas examines a wide range of physical, chemical, organoleptic, microbiological and bacteriological parameters, in accordance with the World Health Organisation's recommendations. Percent conformity Quality controlled by 500,000 tests annually * Turbidity: this parameter exceeds the stipulations in the Concession Contract and Regulatory Framework

  13. Human Resources Developing human resources has been one of the management pillars of Aguas Argentinas Training • 933,086 hours of training • Construction of a: • Training Centre in the Drinking Water Treatment facility at Gral. San Martín • Technical Training Centre at the Varela facility Constructive relationship with the SGBATOS (The Trade Union of Sanitation Workers in the Greater Buenos Aires Region)

  14. Continued improvement in customer satisfaction Aguas Argentinas has achieved a high level of satisfaction with its technical service and with its commercial contacts (more than 90% of customers give the company a score of 7 or higher) Consultant: GEA Market Research, sample from offices and Technical Services

  15. Pricing issues

  16. Increase in prices to residential customers since the start of the Concession 28.5%Due to additional investments 7.7% Due to variations in Infrastructure Charges (IC) and the Renovation of Connections Charges (RCC) 15.9% Due to increased costs 52.1% TOTAL • The increase of 88% (vs. 52.1%) mentioned in a report issued by ETOSS to the UNIREN is not correct, because it counts charges already existing in the pricing base as increases (IC and RCC)

  17. Out-of-step Prices The 15.9% review of the average residential price due to increased costs must be compared with the 73-% change in the CPI up to September 2004. 180 160 140 120 100 Aug-92 Aug-93 Aug-94 Aug-95 Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Average residential price CPI Note: August 1992: bid reference price

  18. 71% of residential customers pay less than $0.50 per day, incl. taxes (*) Total Residential Customers (2,270,000 accounts) Residential Customers with bills of less than $ 0.50 per day (1,610,000 accounts) 71% Note: (*)Taxes: VAT and Finance Charge to the Regulator

  19. The impact of the Aguas Argentinas bill on the family basket is one of the lowest in Argentina • The impact of the average price on the average family income for the main sanitation services in the country. CONCESSION AVERAGE = 2.1 NATIONAL AVERAGE = 4.0 (*) (*) (*) (*) Note: (*)(*) EPH survey by locality in each province

  20. With its average price at 50% of the OSN price, Aguas Argentinas has invested 4 times more PRICE INDEX Based on the CPI-adjusted average nominal price (Consumer Price Index) INVESTMENT INDEX Based on the WPI-adjusted average nominal amounts (Wholesale Price Index) Note: Changes in the price include the SUMA. The charge is taken as if it were a price increase and not a concept substitution (Infrastructure Charge and PSI differential costs)

  21. Status of contract fulfilment

  22. Status of contract fulfilment Despite the difficulties, there is a limited difference between the goals committed to and those achieved Comparison: goals committed to and those achieved Population target Population target Population target Year 8 (2001) ORIGINAL REVISED* REACHED 88% 79% 78% Drinking water Sewerage system 74% 65% 61% *The original goals were revised based on problems which arose during the first 5-year plan (see next slide) Source: PMES (Plan for the expansion and Improvement of Service) approved by ETOSS (Water Regulatory body)

  23. Contract Difficulties during the 1st 5-year Plan Contract difficulties • Billing base 15% < than forecast • Suspension of the Infrastructure charge (1995) • Suspension of the Universal Service Charge (1998) • Non-application of the pricing regulation (Art. 47MR) EARNINGS DEFICIT $493m INVESTMENT DEFICIT $338m First 5-year plan • 87% of the original Water goal • 61 % of the original Sewerage goal • Increase in debt

  24. Contract difficulties during the 2nd 5-year Plan 1999 - 2000 • Investments of $395m FULFILMENT 100% 2001 • Investments of $136m FULFILMENT 72% THE FINANCIAL CRISIS PREVENTS THE RENEWAL OF THE FINANCING LINE FROM JUNE 2001 • 2002 - 2003 EMERGENCY • Price freeze vs doubling of investment costs • Priority given to maintenance investment $140m • Expansion (trust and own funds) $81m

  25. Political, economic and social crisis December 2001

  26. Maintain quality of service Reach the most vulnerable sectors Social Pricing The first company to implement a programme of social pricing: 85,226 residential customers benefited and 708 non-profit organisations Programmes in low-income neighbourhoods Participative Management model: programme based on a model of collaboration and integration of: the community, local authorities, the company and the regulator to find solutions to the problems of access to services. 150,000 inhabitants benefited / 93 works projects were finalised / 68 information and educational workshops were held Water and Work plan: with the help of the government, this programme was rolled out with the aim of expanding the provision of drinking water services in the La Matanza area. 100,000 inhabitants benefited / 82 works projects finalised or in process / 77 work cooperatives with 1,200 members trained From the start of the crisis, Aguas Argentinas managed to achieve three basic objectives • Protect the sources of work

  27. Contract renegotiation

  28. Renegotiation Chronology 07/ 01/2002 "Public Emergency" law Freezing of prices and non-application of the contract clauses relating to indexation in the event of devaluation. 14/02/2002 Creation of the Contract Renegotiation Committee under the auspices of the Department of Finance 18/03/2002 Formal opening of the renegotiation The Committee started by requesting information on the Concession's financial position and its short-term prospects 08/11/2002End of the information-collection stage The discussions start 10/04/2003Negotiations break down Having failed to reach an agreement on the proposals tabled by both parties.

  29. Renegotiation Chronology 27/04/2003Presidential elections 04/07/2003Creation of “UNIREN” (Unit for the Renegotiation and Analysis of Public Service Contracts) Under the auspices of the Department of Finance and the Federal Planning Department, its mission is to complete the renegotiation of public service contracts and to analyse the fulfilment of the obligations under previous contracts. 07/2003Formation of a trust fund The Regulator required Aguas Argentinas to form a trust fund, under threat of executing the contract guarantee. 22/10/2003Extension of the renegotiation term The deadline for renegotiating public service contracts was extended to 31 December 2004. 01/2004 Unilateral extension of the Trust by the Government

  30. Renegotiation Chronology 11/05/2004 Signature of the Protocol of Agreement Agreement establishing an investment schedule totalling $242 million, to guarantee the continuity of service quality and the expansion of supply. The agreement also established the bases for re-defining the contract during 2004. 06/2004 Request for information from UNIREN 05/08/2004 Response from Aguas Argentinas to this request for information 12/10/2004 Aguas Argentinas presents its proposal 31/12/2004 The Protocol of Agreement comes to term Aguas Argentinas fulfilled its obligations under the terms of the Protocol of Agreement. The company received no response from the Government on its proposal.

  31. Renegotiation Chronology 2005 01/2005Unilateral extension of the Trust Kirchner-Chirac meeting in Paris Document drawn up with the points of agreement From 01/2005 to 06/2005 Exchange of proposals without achieving a consensus 07/07/2005 Aguas Argentinas' definitive and final proposal Reaching an agreement is urgent as the company's operating and financial situation does not allow it to continue to satisfactorily ensure its customers continuity and quality of service 26/07/2005 Aguas Argentinas sends a formal request to the Government to take the necessary measures within 30 days to re-establish the equilibrium that existed under the contract

  32. Renegotiation Chronology 9/09/2005 SUEZ has decided to recommend that the next Aguas Argentina's Board of Directors meeting, planned for September 19, 2005, puts in place the withdrawal process from the contract 19/09/05 Taking note of the negotiations failure, the Board is forced to propose to the next general assembly, on the 22nd of September, to initiate the withdrawal process. 22/09/2005 The General Assembly ratified the Board’s proposal to initiate the contract’s withdrawal process and asked the Board to examine with Argentinean authorities the practical modalities to put in place an orderly transition, in order to preserve the continuity of the service as well as employees’ interests.

  33. Concession's current economic position (AT CURRENT EARNING LEVELS) The Concession is currently losing $300,000 per day RESOURCES M$ PER YEAR REQUIREMENTS M$ PER YEAR OPERATING MARGIN 150 INVESTMENTS 500 ANNUAL DEFICIT 650 AMORTISATION OF REGULATED ASSETS 300 • Average annual values in $ (2005-2023) • 2004 billing in the region of $650m

More Related