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

Argentina has secured a deal for its 90 percent stake in the water and sewage operator, AySA, with a US$340-million sale to a consortium comprising local and Brazilian companies. This marks a victory for President Javier Milei's privatization agenda, following a setback in a railway tender. The government announced Thursday that the contract will be signed next month.

This privatisation is significant for Milei, who aims to dismantle interventionist economic policies established over years by the Kirchner political dynasty. The libertarian president will seek a second term next year, amid questions about the effectiveness of his free-market experiment. In 2006, former president Néstor Kirchner revoked the Buenos Aires water licence from a French-led entity, leading to the creation of state-owned AySA to take over the service.

This decision, along with the loss of an international arbitration case regarding the utility in 2019, contributed to a loss of investor trust in Argentina's legal safeguards. Just before the AySA deal was finalized, Mexican billionaire Germán Larrea's conglomerate withdrew from a bid to take over a state-owned rail network. The government's string of privatizations has been a key component of Milei's economic program since he assumed power almost three years ago.

However, the process has been challenging, with lawmakers rejecting many proposed sales, including those of the oil giant YPF SA, the national airline, and bank. Despite this, Milei has managed to complete a few deals, including the sale of engineering company Impsa and the winding down of energy vehicle Enarsa through asset divestment.

In June, Enarsa sold its stake in power line operator Transener for US$356 million. Earlier this month, investors in power generator YPF Luz abandoned an IPO, opting instead to sell privately, reflecting the mixed outcomes of privatization efforts under Milei's leadership.