23 step in to prevent this from happening. However, this measure was deferred because the Ombudsman initiated proceedings for the protection of these rights.

# Experience regarding network expansion

> According to a recent MEYSP study (1997), out of the 27 million inhabitants of the urban

> areas, close to _5_ million did not have their basic needs met, and most of themhad no drinking water or sewers. There is no comparative data to show how these figures have evolved, although it is believed that the situation has improved. However, the low-income population may have broken . down into two groups. On the one hand,. many low-income people· have been included in .plans allqwing them access to services, some of these plans in combination with the Ministry of Labor (for

> example, the inhabitants of a low-income . neighborhood were hired to carry out the infrastructure works) and the Province of Buenos Aires (more general community coordination and assistance plans targeted at all aspects of poverty); In this way, the low.:.income population improved the infrastructure and regularized their situation regarding the ownership of the .land they live on. On the other hand, some residents have been unable to simultaneously face new obligations in addition to their real estate taxes,· payment of their land installments and electricity and water tariffs, among others, Therefore, these inhabitants have shown a trend to migrate toward less formal districts, or to where these plans are not applicable, such as the Federal Capital shantytowns. This has led to the appearance of jurisdictional externality and elusive demand, which entails the migration of people

> seeking to avoid paying the cost of the service. Furthermore, the adherence of a great part of the neighborhood to the network would make substitutes disappear, forcing others to move into another area.

Decree 149/97 authorized the comprehensive renegotiation of Aguas Argentinas' goals' and demands over a term of 180 days, which could be extended for an equal period. This would be the first privatization that is globally reviewed. The national authorities justified this review of the concession by noting the need to reestablish the licensee's economic and financial equation, which had been affected by the suspension of the infrastructure and connection charges that were to be paid ·by new users. The impossibility of paying for infrastructure costs did not change much in Greater Buenos Aires, as far as Aguas Argentinas is concerned. According to the budget estimate, in 1997 their revenue would have been around US$50 million, with total bills amounting to $400 million. In · view of the population's situation, it was impossible to collect that much money.

It is worth noting that bills that contained the extra $4 cost per bimonthly period are already riot performing to some degree (cf.MEYSP, 1997). The available figures regarding family income help to explain why this is happening. For the first decile, the nominal and real income reached a maximum value in 1994 and then dropped, while the unemployment rate remained high (affecting the poorest segments). In order to compensate for this imbalance, several alternatives have been considered since 1996. These include:

- modifications in the economic and financial parameters of the concession: fixed increases of $2 or· a certain percentage of the tariff, or the reduction (by one-half or one-third) of the infrastructure and connection charges, together with a 7% tariff increase;

- extension of the serviced area to other districts in Greater Buenos Aires;

- extension of the concession term;

- temporary reprogramming of those works viewed as obligatory investments; and

- Treasury subsidies for the US$50 million not collected.

It is difficult to solve this situation because the target population is the low-income sector and the costs for making connections in poor areas is not really known. . Moreover, the companies have