The privatization of most state-owned infrastructure business in Argentina in the 1990s, which attracted more than $22 billion to the Argentine economy, was primarily funded by debt from major international lenders. The lenders were attracted in large part by concession contracts that used the US dollar as the basis for future regulated charges. In 2002, when Argentina passed a law removing the US dollar clause in concession contracts, many privatized utilities defaulted on their debt payments.

In three prominent cases that ensued, NERA supported the claimants’ counsel by providing advice based on expertise in regulatory and economic matters in the energy and transportation industries. NERA economists analyzed the financial and operating performance of the regulated businesses and developed financial models to examine the borrowers’ capacities to repay their debt.

Evidence presented by NERA showed that the defaults were a direct and inevitable result of politically-driven changes to concession contracts. As a result, all three cases ended favorably for our clients.

Note: this case profile was re-published as an article in Transnational Dispute Management, Vol. 2, Issue 5, November 2005.