Argentina has selected a victor for its 90 percent stake in Buenos Aires water and sewage operator, AySA, with the US$340-million agreement representing a success for President Javier Milei’s privatisation strategy following a setback in a railway tender. The government announced on Thursday its intention to divest its shares in Agua y Saneamientos Argentinos SA to a consortium comprising both local and Brazilian firms, with the contract expected to be finalised next month. It represents a symbolic privatisation for Milei, who is endeavouring to dismantle the interventionist economic policies that have been established over the years by the Kirchner political dynasty. The libertarian is poised to seek a second term next year, despite prevailing uncertainties regarding the outcomes of his free-market experiment.
In 2006, former president Néstor Kirchner annulled the Buenos Aires water licence held by a French-led consortium, subsequently establishing the state-owned AySA to assume control of the service. The decision was one of several that signalled the beginning of a period during which investors began to lose confidence in Argentina’s legal protections. The government also experienced a setback in an international arbitration case concerning the utility, which was resolved in 2019. A day prior to the finalisation of the AySA agreement, a conglomerate under the control of Mexican billionaire Germán Larrea withdrew from the competition to acquire a state-owned network of freight rail lines.
Grupo Mexico SAB, supported by US interests, expressed apprehension regarding the operational framework adopted by Milei’s administration – and its choice to withdraw highlights the inconsistent outcomes of his privatisation strategy to date. Privatisations constituted a fundamental component of Milei’s economic agenda upon his ascension to power nearly three years ago. However, the journey has been tumultuous, as legislators in 2024 have declined to permit the government to divest from numerous enterprises, including the prominent local oil company YPF and the national airline and bank. Milei has successfully finalised a limited number of agreements.
Initially, the government divested engineering firm Impsa and is concurrently liquidating its energy entity Enarsa through a systematic sale of its assets. In June, Enarsa divested its interest in power line operator Transener for US$356 million. At one juncture, the government’s initiative to privatise AySA was poised to encompass an initial public offering of a portion of its shares; however, the strategy ultimately did not materialise. Equity offerings during the Milei administration have been notably scarce. Earlier this month, investors in power generator YPF Luz opted to abandon an IPO in favour of a private sale.
