MercoPress. South Atlantic News Agency

British companies demand Argentina

British Gas and National Grid, both UK companies with strong investments in Argentina are demanding compensations from the Argentine government for losses experienced during the application of the Economic Emergency Bill.

The claims involving over 350 million US dollars have been presented before the United Nations Committee on International Trade Law, UNCITRAL, UN's main body regarding international business litigation.

British Gas is the main partner of Metrogas, Buenos Aires main natural gas distribution system, and National Grid controls Transener, one of the country's principal electricity distributors. Both companies argue the Argentine government ignored contracts and the investment protection agreement with Britain. Ad hoc courts in the framework of UNICITRAL will decide on the cases.

Argentina also faces demands from other foreign corporations with investments in the country but these are lodged in the World Bank's Centre for Settlement of Investment Disputes, Ciadi. These claims total 4,5 billion US dollars basically from nine companies who allege "indirect expropriation" because of the 2002 Economic Emergency Bill and the strong devaluation of the Argentine currency.

They include, Enron (natural gas) claiming 286 million US dollars; CMS Gas (natural gas) 265 million US dollars; LG&E Energy (natural gas and energy) 268 million US dollars; Continental Casualty (insurance) 45 million US dollars; Pan American Energy (oil) 300 million US dollars; Enersis (energy) 1,8 billion US dollars; Aguas de Aconquija (water) 375 million US dollars; Azurix (water) 566 million US dollars and Siemens (technology) 550 million US dollars.

The total number of companies involved in the Ciadi litigation amount to twenty, although eleven, among which Spain's Telefónica, have not made public their compensation claims.

Since the 2001/2002 meltdown of the economy, successive Argentine governments have been insistently reluctant to increase public utility rates given the potential social and political risks involved. Most Argentine public utilities were privatized during the nineties and since the freeze foreign corporations have been demanding increases, and now legal compensations. The IMF has also pressed on the issue.