Suez Leaves Uruguay; Government Tampers With Constitution
Water transnational corporation Suez, will finally withdraw from Uruguay, where it provided water and sanitation services in Maldonado department, through its subsidiary Aguas de Barcelona (AgBar). The Uruguayan government decided to buy shares of Aguas de la Costa, while it announced the creation of a Public-Private partnership that will continue providing the service. According to the National Commission in Defense of Water and Life (CNDAV), which promoted the Referendum to nationalize water services in 2004, buying shares is against the Constitutional provisions.
After several months of negotiations, the Uruguayan government purchased Aguas de Barcelona’s shares , subsidiary of French transnational corporation Suez– in Aguas de la Costa — a private corporation that has provided water and sanitation services in part of Maldonado department since 1993.
AgBar became part of Aguas de la Costa in December of 1997, when it started running the corporation. 30% of the remaining paid-in capital belongs to S.T.A. Ingenieros while the other 10% belongs to Benencio S.A.
The negotiation concluded with the payment of $3.4 million dollars to the transnational corporation to buy 60% of the shares of Aguas de la Costa. The remaining assets are owned by Uruguayan capital that did not give in, in the negotiation with the government.
The National Commission in Defense of Water and Life (CNDAV), which promoted the constitutional reform in 2004 that forbids water privatization, believes the solution found by the government violates the Constitution.
“The measures proposed are unconstitutional,” said María Selva Ortiz, from REDES-Friends of the Earth Uruguay, and also member of the CNDAV. “Not only as regards to the negotiation to pay Suez, but also to the legal solution proposed to continue providing services.”
Uruguayan authorities have announced they will promote a bill to let Aguas de la Costa operate through a Public-Private partnership. This type of partnership is not contemplated under the articles of the constitution amended in 2004, which provide that water should be ‚directly and solely” managed by the state.
Despite the fact that the Uruguayan government issued a decree in May of 2005 to let private water corporations continue operating, also in violation of the Constitution, Aguas de Barcelona acknowledged in a press release that ‚Agbar‚ withdrawal from Uruguay takes place after a change in the country‚ regulations, that led state companies to provide water and sanitation services.”
It is also true that the company‚ withdrawal from Uruguay takes place amid Suez withdrawal from the region. The company was forced to sell some of their contracts in Brazil, has faced a harsh situation in Argentina, and a strong resistance in Bolivia, where the current minister of water has led the social struggle against Suez policies in El Alto.
In Uruguay, Suez operations raised strong opposition among the local community as a result of the excessive tariff increase, the lack of services and the serious environmental damages caused by Suez management (the desiccation of the lagoon used as a source to extract water, and due to several breaches and waste spills).
In October of 2005, a year after the Constitutional Reform came into effect, the Uruguayan government had terminated the contract with another transnational corporation, Uragua , subsidiary of Spanish company Aguas de Bilbao , which used to provide water and sanitation
services in Maldonado department. Uragua’s operation had similar consequences to those of Aguas de la Costa.
Despite the nationalization of the water services in Uruguay, the contents of the constitutional reform as regards to the interest and social control in the corporation, as well as the implementation of public policies that ensure a sustainable and fair management of water resources, remain to be discussed.
REDES-AT Corporaciones
Carlos Santos
San José 1423
Montevideo
Uruguay
CP 11.200