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Aguas del Aconquija S.A.: Privatization in Troubled Waters

Published 02 May 2005
Reference 5275
Topic Strategy
Region South America
Summary

The case is about the privatization of water in the Argentinean province of Tucumán, and its subsequent re-nationalization, which attracted major media and NGO coverage as epitomizing the drawbacks of public-utility privatization. It looks at the conflict between the Provincial Government of Tucumán and Aguas del Aconquija SA, the concessionaire.

Teaching objectives

The first objective of the case is to take a cross-cultural approach to political risk. Political risk is often thought of as macroeconomic risk. The second objective of the case is to draw participants' attention to the fact that a positive ex ante country-risk assessment may be misleading when the investment itself (or subsequent actions) alters the political climate for the worse. The third aspect is to discuss the viability of the private provision of water services, and if the relations between foreign investors and host countries should be codified in a multilateral investment agreement.

Keywords
  • Public utilities
  • Water privatisation
  • Latin America
  • Political risk
  • Natural monopoly
  • Foreign direct investment
  • Corporate social responsability
  • Bilateral investment treaties RESPONSIBILITY
  • BILATERAL INVESTMENT TREATIES