• 2016
23 Dec 16

Santiago, December 23 2016

MR.
JUAN C. PONCE HIDALGO
OPERATIONS MANAGER
BOLSA DE COMERCIO DE SANTIAGO


Of our consideration:

In regard to your letter on December 23 which requests us to inform the special circumstances or relevant events that can explain the decline in Inversiones Aguas Metropolitanas’ shares which occurred on this day, we highlight the following.

1. We understand that the decline in the share price is due to the approval of a Project of law in its first constitutional instance by the Chamber of Deputies which affects the current legislation for public sanitation services, non-regulated services, and the fulfillment of development plans by utility companies.

2. The referred project of law is still in its legislative process, passing onto the second constitutional instance in the Senate.

3. It is important to highlight that the Company trusts that in the upcoming months, both the National Congress and in the Government will focus on deeply analyzing this law initiative which in our opinion suffers from insurmountable repairs from a constitutional, legal and economic point of view in order to safeguard the fundamentals of the model and which allow the industry to continue on the path which has made it an example worldwide.

4. Attached are the Company’s Press Release and the Ministry of Public Works’ Press Release which were both released on December 23, 2016.

With Regards,

Laure Cano Iniesta
Inversiones Aguas Metropolitanas S.A.

PRESS RELEASE INFORMED BY AGUAS ANDINAS 

Aguas Andinas: "This Project of Law is a drastic change in the existing legislation and introduces uncertainties."

  • The Company trusts that in the following months there will be a more in depth analysis of this initiative in order to safeguard the successes of the existing model and that it will move forward on the path that has led the local sanitation industry to be an example worldwide.

Santiago, December 23 2016. Aguas Andinas informed that is it currently analyzing the effects and consequences that the recently introduced Project of Law, Bulletin 10.795-33 will have on the industry. This law which was recently passed by the Chamber of Deputies of the Senate introduces changes to the sanitation legislation.

The Company highlighted that although it has always been open to improvements in the technical aspects of the law, the parliamentary initiative that has been approved implies drastic changes to current legislation introducing great uncertainties in the financing of investments which are necessary in order to ensure that the

Company can provide potable water to Chileans in a scenario of water scarcity and climate change.
Aguas Andinas has invested USD$2,500 million since 2000 and has committed investments for USD$830 until 2020. Just in 2015, the Company’s investments reached 95% of the Company’s earnings. Amongst other achievements, five years ago the Company made Santiago the first capital in Latin America to reach 100% of sewage treatment and 100% of coverage in potable water, with one of the lowest tariffs in the OECD countries.

The Company emphasized that all of these investments have been conducted with the participation and support of numerous investors, banks, and Chilean and foreign investments funds who have trusted in the stability of the rules of the game and the seriousness of our country. However, the proposed criteria will prevent the Company from projecting new investments since it will be extremely hard to obtain financing for these works.

In addition to this, the project politicizes the tariff settlement process by making the government determine two out of the three members of the Committee of Experts, with which the authority will now be the judge in a process which, to date, has been known for its technicalities and Independence.

Contrary to the authors of this initiative, the current framework does include that part of the non-regulated revenues be discounted from the tariffs and this has already been done in previous tariff processes.

Aguas Andinas has highlighted that it trusts that in the next months both the National Congress and the Government will focus on conducting a profound analysis of this initiative in order to safeguard the successes of the existing model and that it will move forward on the path that has led the local sanitation industry to be an example worldwide.

PRESS RELEASE

MINISTRY OF PUBLIC WORKS

In consultation with market stakeholders in regards to the parliamentary motion which was recently approved in its first legislative instance in the Chamber of Deputies in relation to legislation applicable to public sanitation services (water utilities), Bulletin 10795-33, the Ministry of Public Works highlights the following:

This project is not sponsored by the Government and its origin is a parliamentary motion. The project has positive aspects such as the homologation of the elimination of cut and reposition of service with other industries and the extension of operational territories amongst other matters. However, it changes conditions in the tariff setting process which are deemed inadequate in order to maintain the necessary levels of investment and quality of services for users.

We hope that in the upcoming legislative steps those aspects that have allowed to make investments in our country are maintained as well as those that protect consumers.

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