WASHINGTON, D.C., Apr. 14 -- The International
Finance Corporation (IFC) has approved a loan and equity investment for
Aguas Argentinas, a new private-sector company that has been awarded a
30-year concession to provide potable water and sewerage services for the
residents of Greater Buenos Aires. The project will contribute to improving
the quality of the environment and public health in the Argentine capital.
Aguas Argentinas was formed by an international consortium led by Lyonnaise
des Eaux-Dumez of France, which will have managerial responsibility. Other
sponsors are Sociedad Comercial del Plata, S.G. de Aguas de Barcelona,
Meller S.A., Banco de Galicia y Buenos Aires S.A., Compagnie Generale des
Eaux, and Anglian Water plc. In addition, the employees of Aguas Argentinas
have a 10-percent ownership stake in the company. IFC will help finance
the first two years of Aguas Argentinas' investment plan, structure the
financial plan and mobilize long-term debt. IFC will provide loans of up
to US$38 million for
its own account as well as an equity investment of up to US$7 million.
IFC also plans to arrange a loan syndication of up to US$77 million. The
investment plan over the first two years includes emergency repairs and
major rehabilitation as well as upgrades and expansions of the network
that will alleviate current pollution and health hazards and improve the
quality of drinking water. The only existing sewage treatment plant is
in poor condition and unable to meet demand. As a result, nearly all sewage
is disposed untreated directly into the Rio de la Plata. By the end of
the project's fifth year, the sewage of almost two-thirds of the concession
area will be receiving at least primary treatment, and potable water will
be available to approximately 80% of the population in the concession area.
Secondary sewage treatment and further extension of the water network will
take place in subsequent years. "This project represents a bold and
innovative approach toward privatization, with the private sector being
n responsibility for the entire water system," according to Mr. Everett
Santos, Director of IFC's Infrastructure Department. "This promises
greater efficiency and savings throughout the system, and will free up
finance for the heavy investment needs of this previously neglected sector."
IFC is the private sector arm of the World Bank Group and the largest multilateral
source of financing for private sector projects in developing countries.