Argentina seals water deal in win for Milei’s privatisation push

Argentina has picked a winner for its 90 percent stake in Buenos Aires water and sewage operator, AySA with the US$340-million deal marking a win for President Javier Milei’s privatisation agenda after a setback in a railway tender.

The government said Thursday it will sell its shares in Agua y Saneamientos Argentinos SA to a consortium made up of local and Brazilian companies, with the contract to be signed next month.

It’s a symbolic privatisation for Milei, who is trying to dismantle interventionist economic policies built up over years by the Kirchner political dynasty. The libertarian is set to run for a second term next year amid doubts about how his free-market experiment is playing out.

Former president Néstor Kirchner rescinded the Buenos Aires water licence from a French-led outfit in 2006, creating state-owned AySA to take over the service. The move was among those that marked the start of an era in which investors lost trust in Argentina’s legal safeguards. The government also lost an international arbitration case over the utility that was settled in 2019.

A day before the AySA deal was sealed, a conglomerate controlled by Mexican billionaire Germán Larrea pulled out of a race to take over a state-owned network of freight rail lines. Grupo Mexico SAB, backed by US interests, had voiced concern over the operating model Milei’s government has chosen – and its decision to withdraw demonstrates the mixed record of his privatization agenda so far.

Privatizations were a pillar of Milei’s economic program when he came to power almost three years ago. But it’s been a bumpy ride, with lawmakers refusing in 2024 to allow the government to sell off many companies, including local oil giant YPF SA and well as the national airline and bank.

Milei has managed to complete a handful of deals. In the first instance, the government sold engineering company Impsa and is also winding down its energy vehicle Enarsa by divesting assets one by one. In June, Enarsa sold its stake in power line operator Transener for US$356 million.

At one point, the government’s move to privatise AySA was set to include an initial public offering of some shares, but the plan fell through. Equity offerings in the Milei era have been few and far between. Earlier this month, investors in power generator YPF Luz also ditched an IPO to instead sell privately.