Govt May Rescind Argentine Postal Concession

Argentina’s government is considering rescinding the concessions for the country’s airports and mail service and then placing them back in private hands, Planning Minister Julio de Vido was reported saying on Wednesday. De Vido was reported by local daily Infobae as saying that the government’s ‘idea is to privatize them again’ although he added that there is a ‘possibility’ that these services will fall into the state’s hands. According to Infobae, De Vido said the government will decide what to do about the country’s airports and mail service, after reviewing the extent to which the private companies’ complied with the original contract terms. The state will then recommend to congress whether a contract should be rescinded and the services placed again in private hands. Congress must vote to accept or reject each recommendation. The comments come a week after the government announced it would review and then renegotiate all 61 public service contracts by December 2004. The country’s airports and mail service were contracted out to private companies during the 1990s in an attempt for the state to shed costs and improve the efficiency of Argentina’s public services. The company which manages the country’s 33 airports is called Aeropuertos Argentina 2000. Correo Argentino – a company headed by local businessman Francisco Macri – runs the privatized postal service. But during Argentina’s recent economic crisis, all the privatized utilities have encountered increasing problems. Since the country’s currency devaluation in January 2002, the companies have seen their dollar-debt servicing costs soar. Meanwhile, the government’s decision to convert rates from dollars into pesos and then cap them has meant many companies to run huge operating losses last year.