Aguas del Aconquija S.A.: Privatization in Troubled Waters

Name: Aguas del Aconquija S.A.: Privatization in Troubled Waters (English version)
SKU: IN-S552

Casanova, Lourdes;Strauss-Kahn, Vanessa

Product #:IN-S552

Supplier:INSEAD

Discipline:General Management

Setting:Latin America, South America

Details:Case (PDF) • 13 pages • 2005-05-02

Subjects:

Antitrust laws Corporate social responsibility Corporate strategy Privatization Risk management Trade

Geography:

South America

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The case is about the privatization of water in the Argentinean province of TucumÃ¡n, and its subsequent re-nationalization, which attracted major media and NGO coverage as epitomizing the drawbacks of public-utility privatization. It looks at the conflict between the Provincial Government of TucumÃ¡n and Aguas del Aconquija SA, the concessionaire.

Learning Objectives

The first objective of the case is to take a cross-cultural approach to political risk. Political risk is often thought of as macroeconomic risk. The second objective of the case is to draw participants' attention to the fact that a positive ex ante country-risk assessment may be misleading when the investment itself (or subsequent actions) alters the political climate for the worse. The third aspect is to discuss the viability of the private provision of water services, and if the relations between foreign investors and host countries should be codified in a multilateral investment agreement.