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Mitigating expropriation risk through vertical separation of public utilities: The case of Argentina

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  • Chambouleyron, Andrés

Abstract

In 2002, Argentina devalued its currency and froze public utility rates thus breaching the guarantees granted to investors the decade before. Those guarantees had lowered investors' cost of capital by substantially reducing expropriation risk. This paper looks into the governance structure chosen by Argentina for the privatization process and potential alternatives after a decade of contract breaches. Future governance should be market-oriented, involving vertically separated companies with former public utilities voluntarily acting as operating companies or OpCos, and NetCos in charge of all network expansions under the structure of PPPs created for such purposes.

Suggested Citation

  • Chambouleyron, Andrés, 2014. "Mitigating expropriation risk through vertical separation of public utilities: The case of Argentina," Utilities Policy, Elsevier, vol. 30(C), pages 41-52.
    • Handle: RePEc:eee:juipol:v:30:y:2014:i:c:p:41-52
    DOI: 10.1016/j.jup.2014.07.002
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    References listed on IDEAS

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    Cited by:

    1. Shrestha, Asheem & Chan, Toong-Khuan & Aibinu, Ajibade A. & Chen, Chuan, 2017. "Efficient risk transfer in PPP wastewater treatment projects," Utilities Policy, Elsevier, vol. 48(C), pages 132-140.

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    More about this item

    Keywords

    Transaction cost; Regulation; Expropriation risk; Public utility;
    All these keywords.

    JEL classification:

    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General

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