French water major Suez to leave Bolivia

LA PAZ, Bolivia, Oct. 23 Tue Oct 24, 2006 12:54am BST

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LA PAZ, Bolivia, Oct. 23 (Reuters) - The Bolivian government announced on Monday that French water services company Suez will end its operations in the South American country by the end of the year.

"We estimate that by December 31, the service would be transferred (from Suez to a new state-owned water company)," said Alvaro Camacho, Bolivia's superintendent of water and sewage systems, according to the state news agency ABI.

Last week, Bolivian President Evo Morales said Aguas del Illimani, controlled by France's Suez LYOE.PA, will not be expropriated, but did not specify under what terms the French company would let its Bolivian subsidiary go.

"We hope to quickly sign an agreement to put an end to the contract so we can open a transition process," Aguas del Illimani Director Antoine Kuhn told reporters.

Kuhn said Aguas del Illimani executives will meet on Nov. 9 to talk about the Bolivian government's proposal to end the nine-year concessiont.

Water minister Abel Mamani told Reuters last week the government would need investments worth $35 million in the next five years to replace Aguas del Illimani with a new state-owned water company.

Since January, the government has said it hopes to reach an amicable settlement in its dispute with Suez over its water and sewage management business in the capital La Paz and neighboring El Alto.

The government's drive to cancel the Aguas del Illimani contract follows massive demonstrations in El Alto, a satellite city of La Paz, four years ago against the French-controlled company, saying it was overcharging customers and failing to invest enough to expand water services to poor neighborhoods.

Suez itself has long sought an exit from Bolivia, but an agreement has been delayed by disputes over the conditions under which the contract can be canceled.

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