Water Privatization in Argentina Essay Example | Topics and Well Written Essays - 1250 words

Water Privatization in Argentina - Essay Example Owing to the presence of outstanding externalities, there is the need for the proper elimination of sanitation residuals that taint the sector. Water privatisation seeks to participation of the private sector with regard to provision of sanitary and water services to residents of the said region. The concept of water privatisation has remained controversial the world over, with the proponents presenting the efficiency and quality services delivered. Privatisation in the water industry often entails three aspects namely outsourcing, design, building and operation, and asset sale. This way, private companies can be contracted to provide various water and sanitary services in accordance to the stipulations agreed on. The companies are often required to design, build and operate a comprehensive system for the dispensation of water services to residents. The process also involves the release of government-owned assets or companies to the private sector for running and maintenance. This pa per seeks to highlight water privatisation in Argentina with regard to history and aspects relating to effects in the society. Privatisation was widespread throughout Latin America in the 1990s including Chile, Brazil, Bolivia, and Argentina to name but a few. During the early 1990’s privatization of services and liberalization of exchange and trade systems was regarded as an easy solution to the problems of deteriorating infrastructure and unbalanced public finances. These changes contributed to economic stability and increased growth as part of a program of direct foreign investment that began in 1995 until the late 1990’s when political instability and social tensions affected economic performance. Argentina forms a prime example of privatisation in the water sector that received backing from the International Monetary fund and the World Bank (Huey, 2010). The period between 1991 and 1999 saw the successful privatisation of water and sanitary services in Argentina t o covering 60% of the population in 28% of the countries municipals. Previously, water services had been under the management of public enterprises at the provincial level and as such, the government had no jurisdiction with regard to privatisation (Galiani et al, 2005).Under these circumstances, the country relied on a single company, ObrasSanitarias de la Nacion (OSN), to deliver water and sanitary services. The company held the largest operation in its mandate with regard to infrastructure and clientele. Seeing the need for change in the status quo, the World Bank exerted pressure on the Argentine government to decentralise the services (Olleta, 2007).The privatisation of OSN came about three years later after the initial appointment following restructuring changes that were required. A French company through its subsidiary, sought to purchase the government-run water company and establish a new company by the Aguas Argentinas. This move was aided by the World Bank who has stakes in the consortium as it funded the company in support of the comprehensive privatisation program. The company was charged with task of supplying clean water to the citizens as well as transporting and treating sewage. The company made returns on their investment and was regarded as a success owing to their enormous profits (Public Citizen, 2003). The concession contract was, however revoked in 2006 after 13 years of services to the citizens; with the main reason believed to contribute to the cancellation of the concession was the economic crisis in the years following 2000. The government argued that the company failed to achieve its targets as cited in the contract with regard