Corfo to keep 5% share in water utilities

Monday, May 30, 2011

The board of Chile's state development agency Corfo has decided to keep at least a 5% stake of the four water utilities in which the government holds shares.

According to Corfo, that minimum percentage will preserve its right to veto operations that involve the transfer of water rights and concessions, paper Diario Financiero reported.

President Sebastián Piñera said in December the government could collect some US$1.6bn from the sale of its shares in the water utilities.

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The government has said the funds from the sale would be used to pay reconstruction costs from the February 2010 earthquake and to fund the expansion of capital Santiago's metro system, and that 25% could be used to fund Corfo entrepreneurship programs, with at least 50% to additional Corfo investments.

Critics have said the sale is unnecessary, will lead to higher utility prices, and will cut funding for Corfo, which receives 40% of its budget from the US$150mn/y generated annually by the state assets.

Corfo holds 45.4% of utility Essal, 43.4% of Essbio, 34.9% of Aguas Andinas and 29.4% of Esval.