Argentina Fast-Tracks Privatization Wave: Full Sale of Argentina’s Water and Wastewater Company (AySA) and Regulatory Overhaul

Legal News - 23 de July, 2025

On 22-23 July 2025, the Argentine Government issued Decrees 493/2025 and 494/2025, authorizing the privatization of Agua y Saneamientos Argentinos S.A. (“AySA”), the state-owned water and wastewater utility serving Buenos Aires City and surrounding districts, and simultaneously enacting an amended regulatory framework for the sector.

1. Transaction structure

• The Federal Government will sell its 90% stake in AySA. The remaining 10% stays with employees under the existing Employee Stock Ownership Plan; no new preferential tranches are contemplated.

• At least 51% must be awarded via a competitive international tender to a “strategic operator”; the balance, if any, will be sold on local stock exchanges.

• The Ministry of Economy, assisted by the Public Enterprise Transformation Agency, will run the process and publish the bid package shortly.

2. Continuity and transition

• Service continuity is guaranteed; AySA remains the operator throughout the process.

• A “2024-2026 Transition Action Plan”, recently approved, prioritizes core investments and operational efficiency.

3. Core regulatory amendments

• Tariff and price principles: Tariffs and prices must be established to allow the Concessionaire to generate sufficient revenue to meet all reasonable operating costs, taxes, and investments, and to obtain a return comparable to that of other activities involving similar risk. Prices and tariffs payable to the Concessionaire may be adjusted if regulatory changes result in variations to the Concessionaire’s costs. These provisions are intended to ensure value creation and to maintain the economic–financial equilibrium of the concession contract.

• Tariff review mechanism: (a) Ordinary tariff reviews at least every five years and (b) extraordinary reviews in the event of unexpected factors.

• Social Tariff and no additional “political” prices without compensation: A social tariff shall be established without affecting the economic and financial equilibrium of the Concession Contract. No further tariff reductions shall be applied unless expressly provided for and funded by the Federal Government, the Autonomous City of Buenos Aires, the Province of Buenos Aires, or the Municipalities, or through subsidies, in the manner and to the extent determined by the Water and Sanitation Regulatory Agency (ERAS). Under no circumstances shall the reductions or subsidies affect the financial and economic balance of the Concession Contract.

• Right to suspend service: The grounds entitling the Concessionaire to suspend the public service for late payment of invoices, as well as the procedure required before suspension, have been modified (60 days’ arrears for households, 15 days for non-residential users, subject to pre-established procedures).

• Other changes to the tariff regime: Amendments to the classification of users in the residential category and differentiated values based on whether the regime is metered or non-metered, zonal criteria, and similar factors.

• Regulatory Agencies: Water and Sanitation Regulatory Agency (ERAS), the Planning Agency (APLA) and the Undersecretariat of Environment as Environmental Authority.

• Action Plan: The Concessionaire shall prepare its Action Plan (based on the Strategic Improvement Master Plan prepared by the Planning Agency APLA) for the approval of the regulatory agency (ERAS). The Action Plan is composed of the Maintenance Plan, the Operations Plan, and the Improvement Plan, which detail the necessary works and actions related to maintenance, operation, and improvement that the Concessionaire must carry out. It also includes the Works Plan, which covers the expansion works for the enlargement and extension of the service.

• Recovery of unamortized investments: The Concessionaire is entitled to recover the value of investments made during the term of the Concession Contract that have not been amortized while the contract remained in force, subject to the methodology to be established in the Concession Contract. This recovery may be claimed once the contract has expired, been terminated, or been rescinded, regardless of the cause.

• Arbitration: Disputes between the Grantor (Federal Government) and the Concessionaire may be resolved through arbitration, if so established in the Concession Contract. Disputes with regulatory agencies would be settled in Argentine courts.

For the Spanish text of the privatization kick-off decree please click in this link.

To access the decree (in Spanish) amending the regulatory framework, please click here. See Annex I and Annex II.

For any questions or queries, please contact: