In a landmark move, the Argentine government accelerates structural reforms by fully privatizing its state-owned water utility and introducing a comprehensive regulatory shift.
To Whom It May Concern,
On July 22 and 23, 2025, the Argentine Executive Branch enacted Decrees No. 493/2025 and 494/2025, by which it approved the disengagement and transfer to the private sector of Agua y Saneamientos Argentinos S.A. (“AySA”), the publicly controlled entity responsible for potable water supply and sewerage services in the City of Buenos Aires and surrounding municipalities. Said decrees also introduced a reformulated regulatory framework applicable to the sector.
1. Outline of the Privatization Process
- The National Government shall divest its 90% ownership interest in AySA. The residual 10% shareholding shall continue under the current Employee Stock Ownership Program. The incorporation of new preferred classes of shares is not foreseen.
- A minimum of 51% of the company’s capital stock must be allocated to a “qualified operating partner” through an open international bidding procedure. Any remaining shares shall be disposed of via public offerings in domestic capital markets.
- The Ministry of Economy, with technical support from the Public Sector Reform Agency, is designated as the coordinating body for the transaction and will soon release the bidding documentation.
2. Service Continuity and Transitional Framework
- The uninterrupted provision of services is formally assured, with AySA remaining the designated service provider throughout the privatization timeline.
- A “2024–2026 Transitional Implementation Program” has been sanctioned, focusing on strategic capital investments and improvements in operational performance.
3. Central Modifications to the Regulatory Regime
- Tariff and Price Principles: Tariff structures must be defined to ensure the Concessionaire can generate adequate revenue to absorb justified operating expenditures, fiscal obligations, and capital expenditures, while securing a rate of return aligned with market standards for undertakings bearing similar risk profiles. Revisions to tariffs may be authorized if regulatory changes impact the Concessionaire’s cost structure, safeguarding the economic and financial integrity of the concession.
- Tariff Adjustment Procedures: Periodic comprehensive tariff reviews are to occur at least once every five years, complemented by extraordinary reviews in response to unforeseen developments.
- Social Tariff and Prohibition of Unfunded Political Discounts: A targeted subsidy scheme will be implemented to support vulnerable users, without undermining the financial sustainability of the concession. Additional discounts or politically motivated tariff adjustments may only be applied if explicitly financed by the National Government, the City of Buenos Aires, the Province of Buenos Aires, or local governments through subsidies, as approved by the Water and Sanitation Regulatory Authority (ERAS). Under no scenario may such measures disturb the concession’s financial equilibrium.
- Right to Service Suspension: Criteria and procedures for the interruption of services due to non-payment have been revised: 60 days of delinquency for residential clients and 15 days for non-household users, subject to previously defined procedural safeguards.
- Further Tariff Structure Modifications: Changes encompass the categorization of users within the residential bracket and differential pricing based on consumption metering, regional segmentation, and analogous parameters.
- Supervisory and Oversight Bodies: The regulatory framework is administered by ERAS, the Planning Agency (APLA), and the Undersecretariat for Environmental Oversight, acting as the competent authority on environmental matters.
- Operational Planning: The Concessionaire must draft and submit its Operational Plan —aligned with the Strategic Master Plan designed by APLA— for formal approval by ERAS. Said plan shall incorporate the Maintenance Program, Operational Plan, Enhancement Schedule (identifying necessary interventions for system reliability and quality), and a Capital Works Program for infrastructure expansion.
- Reimbursement of Non-Amortized Investments: The Concessionaire retains the prerogative to claim compensation for capital expenditures not fully amortized at the time of contract conclusion, rescission, or termination, irrespective of cause, as per the terms and methodology prescribed in the Concession Agreement.
- Dispute Resolution Mechanism: Conflicts between the Grantor (the National Executive) and the Concessionaire may be resolved through arbitral proceedings where foreseen in the Concession Agreement. Disagreements involving regulatory bodies shall be subject to the jurisdiction of Argentine judicial authorities.
Sincerely,
ANDRES WILLA
Buenos Aires, Argentina
Andres Willa Abogado 