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Press releases, Paris, France, 01/07/2002
Impact of Argentine devaluation
SUEZ is active in Argentina in Energy, Water, and Waste Services, which together account for 3% of Group revenues and 4% of capital employed.
Water is the first activity of the Group which is responsible for the concessions of Buenos Aires, Santa-Fé, and Cordoba. In Energy, the Group’s activities are more limited (Litoral Gas, Gasoducto, Nor Andino…) as well as in Waste Services whese SITA through its subsidiary Cliba Provides Services to Buenos Aires and Cordoba.
The impact of the devaluation of the Argentine peso will vary by area of business activity.
The devaluation will have little impact on revenues from the Group's Energy activities in Argentina as they are indexed to the USD. Neither will the devaluation's impact on the contribution to Group revenues of Waste Services activity in Argentina be significant.
For the Group, the impact is concentrated on Water. Nevertheless the largest concession contract (Buenos Aires) has provisions protecting against any devaluation. It provides, for example, for rate adjustments to ease debt servicing during the 12 month period following a devaluation. In addition, rate adjustment mechanisms and/or investment plan adjustments are contractually provided to preserve the concession's long term economic and financial stability.
Furthermore, during recent months all SUEZ subsidiaries led by Philippe Brongniart, Member of the Board, Senior Executive Vice President who has gone to Argentine several times, have taken measures, such as cutting operating costs and reducing investments, to contend with the deteriorating local economy.
The combination of these elements should, over time, offset the immediate, direct impact of the devaluation.
Moreover 2000, Group accounts include a provision to cover macro economic risks affecting the implantations of SUEZ in developing countries. Within this framework an amount of 100 million Euros has been affected to Argentina. Taking into account the effective rate (29 %) decided on by the Argentine authorities, the impact has been brought to 135 million Euros. This complement represents a little more than 1 % of net income Group share forecast for the year 2001.
SUEZ will immediately enter into discussions with the Argentine government to adapt its activity and contractual obligations to the new situation in Argentina today.
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