(MENAFN- The Journal Of Turkish Weekly) Argentina said Friday it will appeal a ruling by the World Bank to pay $405 million to France's Suez as compensation for the 2006 state takeover of its water and sewerage utility in Buenos Aires.
"We are going to appeal the ruling," Economy Minister Axel Kicillof said in a televised press conference.
The International Centre for Settlement of Investment Disputes, a Washington tribunal that hears cases of investors operating in foreign countries, ruled Thursday that Argentina must compensate Suez's water unit, Suez Environment, for the early scrapping of its 30-year concession. Suez had been operating the concession since 1993.
At the time, the government cited poor service, dirty water and a failure by the owners to meet the investment requirements of their concession, including expanding services to another 2 million water users and 4 million for sewerage in the capital and outlying districts.
The service, the biggest in Argentina, is now operated by state-owned Aguas y Saneamientos Argentinos.
Kicillof said the tribunal's ruling is "against the company" more than Argentina.
This is because the company sought $1.2 billion in compensation for lost investment, moral damage and severance.
"The company sought everything," Kicillof said. "The ruling only recognizes a third (of the claim)."
The tribunal's decision takes into account the amount that Suez estimates as lost investments from the early retirement of its concession.
Argentina awarded the concession to Suez in 1993 during a wave of privatizations that helped rebuild sagging infrastructure after a 1976-83 military dictatorship.
But after a 2001-02 economic collapse, subsequent governments began to pressure private companies, including with price controls and investment demands. A number of foreign companies pulled out while others reined in spending, and several took their grievances about contractual changes to the World Bank tribunal.
Spain's Repsol received about $6 billion in compensation last year for the 2012 state takeover of 51 percent of its shares in YPF, the country's biggest oil company.
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