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

Andrés Chambouleyron

Utilities Policy, 2014, vol. 30, issue C, 41-52

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.

Keywords: Transaction cost; Regulation; Expropriation risk; Public utility (search for similar items in EconPapers)
JEL-codes: L97 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:30:y:2014:i:c:p:41-52

DOI: 10.1016/j.jup.2014.07.002

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