By IANS/EFE,
Santiago : Chile Wednesday announced plans to divest its minority stakes in four water utilities, saying it expects to raise some $1.6 billion from the sales.
The government is looking to finalise the deals within a period of between six and nine months, according to Economy Minister Juan Andres Fontaine, who confirmed reports in the business press that President Sebastian Pinera had given the order for the sale a couple of weeks ago.
The announcement sparked criticism from the political opposition and former president Eduardo Frei Ruiz-Tagle, whose 1994-2000 administration partially privatised Chile’s leading water utilities, leaving the government with minority stakes.
Frei, now a senator, called the announcement “a Christmas gift” to the private companies.
Those firms include Aguas Andinas, which is controlled by Spain’s Agbar and serves 1.3 million customers in Santiago.
The board of directors of the Corfo development corporation, which represents the government’s stake in the utilities, still must vote next week to approve the divestitures, Fontaine told a press conference.
Press reports indicated the proceeds would be used to rebuild infrastructure that was damaged or destroyed in the devastating Feb 27 earthquake, although Fontaine mentioned other uses for the funds and said opponents of the plan were “misinformed”.
“The money will help strengthen our actions in the area of entrepreneurship, support for SMEs (small and medium-sized enterprises) through Corfo, and also assist public companies that have important projects, such as Codelco (the state copper company), Indap (Agricultural Development Institute)” and the railroad and metro companies, he said.
Finance Minister Felipe Larrain, meanwhile, said the stake sales will not affect the utilities’ rates or service, adding that the funds will help finance other public companies with promising investment projects.
The state’s interest in the water companies represents some $150 million in annual revenue, which is administered by Corfo and, according to Sen. Frei, funds much-needed programmes and subsidises water and sewage service for 600,000 low-income families.
He said the proposed sale would involve ending a social programme “that has been tremendously successful”.