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EXHIBIT 10.23
MEMORANDUM OF UNDERSTANDING
In the city of La Plata on the 15th day of February, 2001, it is agreed to sign
this memorandum of basic understanding between the Ministry of Public Works and
Utilities of the Province of Buenos Aires, represented by the Hon. Minister
Xxxxxx Xxxxxxxxx, the water and sewer service concessionaire for the province,
AZURIX Buenos Aires S.A., represented by its General Manager Xx. Xxxx Xxxxxx
Xxxxxxxx, with the presence of the Hon. Secretary General of XXXXXX, Xxxxx
Xxxxxxx, the Hon. Secretary General of SOSBA, Xxxxxxx Xxxxxx, and Mayors who
were present, who acknowledged, with their signature, that they were familiar
with the Exhibit containing the 2001 Work and Action Plan, and, in the next few
days, the rest of the districts involved will also acknowledge their
familiarity, and also present were Provincial Legislators from both Xxxxxxxx.
BACKGROUND:
The principal objective of the transformation of the water and sewer sector
implemented in the province of Buenos Aires by Law 11,820 was to guarantee the
maintenance and expansion of water and sewer service to any persons or legal
entities residing or having places of business within the province and to
establish regulations aimed at ensuring quality, continuity and regularity in
the provision of the service, protecting the rights of customers and
safeguarding water resources and the environment.
The need to have support in the form of private investment for achieving the
objectives established by legislation was the reason for granting a concession
for such service, and basic guarantees were imposed on investors through
international competitive bidding which guaranteed participation by qualified
operators.
One year after the privatization, it has been impossible to reconcile the
objectives with the regulatory framework and the concession agreement, so it has
become necessary to establish objective criteria in the priority investments
that will guarantee minimum conditions for current customers and the expansion
of the service to sectors that are most vulnerable to sanitation risks.
It must be kept in mind that only with a plan for priority work will the quality
and continuity of the service be guaranteed, through work and action that will
make it possible to improve the condition of the systems and facilities and
improve the efficiency of operations.
The responsibility of the concessionaire with regard to the provision of the
service is clear under the terms of the concession, but the development of the
concession requires the presence of the Provincial Government, as the Concession
Grantor, and participation by the municipalities, by their familiarizing
themselves with the actions that will be taken to resolve localized problems in
the service.
In addition to guaranteeing the residents' right to be provided the service, the
Provincial Government must provide societal input from economically
underdeveloped and needy sectors, which will be the subject of analysis as
provided in this agreement.
The predictability of the service becomes relevant when the economic-financial
environment in which it is being provided (the national and international
economic situation), there are not enough incentives to support the investment
that it requires.
It is felt that it will be necessary to create a working mechanism for the
purpose of generating viable alternatives that that will make it possible to
overcome disputed matters and to refer the solutions to the appropriate
constitutional and administrative entities for their consideration.
Therefore, the undersigned agree:
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Article 1. To form an interactive working committee, which shall be composed of
three (3) representatives from each of the parties (MPWU and AZURIX S.A.), who
shall be designated within five calendar days from the signature hereof.
Article 2. The objectives and missions of the Working Committee will be to
jointly analyze the matters referred to in this article and to submit proposals
to the Ministry of Public Works and Utilities of the Province of Buenos Aires
for its consideration and referral to the appropriate agencies.
2.1. REGULATORY MODEL
In view of the provisions of Article 5.3, 3rd paragraph, of the
Concession Agreement, it has become essential to develop an
economic-financial model that will make it possible to oversee and
regulate the service, with which it will be possible to establish a
priori the equilibrium position of the concession and the effects
thereof in the light of changes in the variables of which it is
composed.
This model is to be submitted by the Concessionaire, prepared by a
qualified consultant, audited by a qualified international consultant
and approved by the regulatory agency (ORAB).
The regulatory model must be based on the requirements of goals for
expansion and quality provided in the Concession Agreement and the
Concessionaire's income, as established in the Rate Structure, in
accordance with the principles established in Article 28-II, Section d
of Law 11,820.
2.2. GOALS OF THE POES
Since in this document the critical condition of the service cannot be
resolved with the criterion of goals by objective, a plan for "PRIORITY
WORK" to be performed by the concessionaire this year is being
established, which work is incorporated into this agreement (Exhibit
1).
Likewise, taking into consideration the criteria of accessibility, risk
and sanitary vulnerability established in Order 179/00 of the Ministry
of Public Works and Utilities and Order 59/00 of the ORAB, the need has
arisen to revise the goals established in the service optimization and
expansion program (POES). The purpose of the revision is to prioritize
the most urgent based on those objective parameters, taking the
aforementioned regulatory model into account.
The ORAB will oversee and regulate the Service by monitoring the
execution of the Priority Work Plan.
2.3. EXPANSION OF THE SERVICE
Since the expansion of the service projected as goals in the concession
agreement are insufficient to achieve universal service within a period
of time that is in accordance with the basic needs demanded by the
concession customers, alternative mechanisms will be studied that will
make it possible to increase the pace of the work involved in the
expansion of the service and the method by which it will be financed.
2.4. SOCIAL CHARGE
The criteria and terms and conditions shall be established for applying
a "social charge" that will benefit economically needy sectors. In
addition, the roles of the various parties involved, including the
Municipalities, customer Associations, etc., will be determined.
2.5. SERVICE TO LOW-INCOME CUSTOMERS
Regulations currently in effect need to be more precise in order to
determine the method in which the quotas of drinking water to be
delivered without charge to low-income customers are to be satisfied.
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2.6. ENVIRONMENTAL ASPECTS
It is necessary to specify the terms and conditions that will make
possible to regulate (from an economic and environmental standpoint)
discharges from vacuum trucks and to establish the criteria for the
application of the industrial surcharge rates. In addition, it is
necessary to specify the scope of the various parties'
responsibilities.
2.7. RULES GOVERNING THE CONCESSION AND OTHER REGULATORY EXPERIENCES
The rules that significantly impact on operations under the concession
will be analyzed in order to propose, if necessary, any adjustments
that will make it possible to achieve, in a harmonious fashion, the
objectives established in Law 11,820 (Regulatory Framework) and in the
Concession Agreement.
In addition, other Argentine and international regulatory experiences
will be taken into account in order to enrich the analysis and to give
the proposals a more comprehensive conceptual framework.
Article 3. The working committee created hereby shall submit to the PARTIES its
first report related to this agreement within thirty (30) calendar days from the
signing of this memorandum and the final report within thirty (30) days
thereafter.
Article 4. The parties shall give workers the right to be heard with regard to
any matters that might affect working conditions and the workers' rights, in
order to get their opinion.
/s/
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
BAHIA XXXXXX
BAHIA XXXXXX
Continuity of the service Ensure the supply of water by drilling and
and water quality. equipping new xxxxx in the Bajo San Xxxx area.
Construction of the connecting system between
xxxxx in the Bajo San Xxxx and existing water
lines.
Ensure the supply to Bahia Xxxxxx by overhauling
the electrical and mechanical system at the
elevation station at the Paso de las Piedras Dike.
Outlet pipe from the filter unit at the Patagonia
Plant (in progress)
Reduction of water not accounted for by repairing
networks and detecting and correcting leaks.
Feasibility study on alternative sources of water
for Bahia Xxxxxx (the study will include matters
related to supplying PROFERTIL [presumably meaning
the PROFERTIL fertilizer plant in Bahia
Xxxxxx-Trans.])
Commencement of the facilities ["Obras", which can
also mean "work". It is not always clear what is
intended in the use of this term-Trans] involved
in the alternative water line financed through the
provincial Trust - Law No. 12,511. The facilities
must be in complete accordance with the results
obtained in the feasibility study.
Continuity of sewer service. Overhaul and reconditioning of the principal
Sewer overflows. gathering lines in Bahia Xxxxxx. This includes
gathering lines larger than 300 mm in Punta Alta.
Coverage of the service. Director Plan and Sewer Projects - of Bahia
Expansion of the service. Xxxxxx. Commencement of facility/work for 2000
Treatment of sewage effluents connections.
Commencement of facilities for the treatment of
sewage that reaches Ing. White and Gral Xxxxx, up
to the amount of $4,000,000 during 2001, financed
through the Provincial Trust - Law N(0) 12,511
XXXXXXX XXXXXXX
Continuity of sewer service. Overhaul and reconditioning of the principal
Sewer overflows. gathering lines in Bahia Xxxxxx. This includes
gathering lines larger than 300 mm in Punta Alta.
Treatment of sewage effluents. Improvements to the sewage Treatment Plant
Quality of sewage effluents.
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Southern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
GRAL. XXXXXXXX
Continuity of the service and Drilling and equipping of 5 Production Xxxxx
water quality. and interconnection piping.
X. XXXXXXXX XXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
Treatment of sewage effluents. Improvements to the sewage Treatment Plant
Quality of sewage effluents.
GUAMINI
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
Treatment of effluents. Quality Improvements to the sewage Treatment Plant
of sewage effluents.
PATAGONES
C. DE [CITY OF?-TRANS.] PATAGONES
Continuity of the service and Reconditioning of the facilities involved in the
water quality. intake and flow to the drinking water treatment
plant
Coverage of the service. Making water connections.
Treatment of effluents. Quality Improvements to the sewage Treatment Plant
of sewage effluents.
PRADERE
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
STROEDER
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
XXXXXXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
SALLIQUELO
Continuity of the service and Drilling and equipping of 2 Production Xxxxx and
water quality. interconnection piping.
Treatment of effluents. Quality Improvements to the sewage Treatment Plant (flow
of sewage effluents. pipe from the pumping station to the receptacle)
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Southern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
SAN XXXXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
Treatment of effluents. Quality Improvements to the sewage Treatment Plant
of sewage effluents.
TORNQUIST
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
TRES XXXXXXX
COPETONAS
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
XXXXXXXXX
MEDANOS
Continuity of the service and Drilling and equipping of 4 Production Xxxxx
water quality.
Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
XXXXX XXXX
Continuity of the service and Reconditioning of the facilities involved in the
water quality. intake and flow to the drinking water treatment
plant
Treatment of effluents. Quality Improvements to the sewage Treatment Plant
of sewage effluents.
MAYOR XXXXXXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
XXXXXXX XXXXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
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Southern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
AYACUCHO
Continuity of the service and water quality. Interconnection of Xxxxx
Studies of water resources and optimization of xxxxx
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
XXXXXXX
Continuity of the service and water quality. Interconnection of Xxxxx
Continuity and pressure of the service. Reduction of water not accounted for by repairing
Water not accounted for. networks and detecting and correcting leaks.
Optimization of distribution networks.
Studies of water resources and optimization of xxxxx
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
GRAL. XXXXXX
Continuity of the service. Electromechanical repairs, including the provision
of electric pumps, control panels, etc.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
GRAL. BELGRANO
Continuity of the service and water quality. Drilling and Equipping of 3 Production Xxxxx and
interconnection piping.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
GRAL. XXXXX
XXXX. XXXXX
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repairs to infrastructure facilities
LABARDEN
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repair of infrastructure facilities.
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Eastern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
GRAL. XXXXXXX
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
GRAL. XXXXXXXXX
Continuity of the service and water quality. Studies of water resources and optimization of xxxxx
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
GRAL. PAZ
Continuity of the service and water quality. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents. (in progress)
MAR XXXXXXXX
XXXX. PIRAN
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repairs to infrastructure facilities
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
CNEL. XXXXX
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
LAS XXXXXX
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repairs to infrastructure facilities
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Eastern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE ACTION PLANNED
-------- --------- --------------
MAIPU
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repairs to infrastructure facilities
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
MONTE
Continuity of the service and water quality. Drilling and equipping of three Production Xxxxx
and interconnection piping.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
PILA
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Repairs to infrastructure facilities
XXXXX XXXXX
Continuity of the service. Electromechanical Repairs. Provision of dosing
pumps, impellers, repair of control panels, etc.
Coverage of the service. Expansion of the service. Construction of networks for the extension of
sewer service in the community (in progress).
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
TAPALQUE
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant.
effluents. Utilization of the sludge.
VILLA XXXXXX
Continuity of sewer service. Sewer overflows. Reconditioning of the sewer network..
Treatment of effluents. Quality of sewage Design, adaptation and startup of the purification
effluents. plant.
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Eastern Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE PLANNED ACTION
-------- --------- --------------
BRAGADO
Continuity of the service and water quality Study of water resources and optimization of xxxxx
Interconnection of xxxxx, Phase 1.
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant.
effluents.
XXXXXX XXXXXXX
Water quality Action aimed at improving water quality, for the
purpose of solving the arsenic problem. Includes
pilot studies for determining the most
["mas", should be "mas-Trans.] appropriate
alternative. Commencement of arsenic treatment
Facilities/Work.
XXXXXX XXXXXXX
Continuity of the service. Electromechanical repairs.
CHIVILCOY
Continuity of the service and water quality. Drilling and equipping of 4 Production Xxxxx,
with interconnecting pipe.
FRENCH
Water quality Action aimed at improving water quality, for the
purpose of solving the arsenic problem. Includes
pilot studies for determining the most ["mas",
should be "mas-Trans.] appropriate alternative.
Commencement of arsenic treatment Facilities/Work.
GRAL. ARENALES
Continuity of the service. Electromechanical repairs.
GRAL. XXXXXXXX
Continuity of the service and water quality. Drilling and equipping of 2 Production Xxxxx,
with interconnecting pipe.
GRAL. XXXXXXXX
Sewer System. Joint study by the Ministry of Public Works and
Utilities (MOSP) and Azurix on structural
conditions of the system. Commencement of
facilities costing $2 million financed with
contributions from the Province, through the
Provincial Trust.
Treatment of effluents. Quality of sewage Improvement to sewage Treatment Plant.
effluents.
L. N. XXXX -XXXXX
Coverage of the service Adaptation of a sector of the drinking water
system for release for public use.
Treatment of effluents. Quality of sewage Improvement to sewage Treatment Plant.
effluents.
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Western Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE PLANNED ACTION
-------- --------- --------------
LINCOLN
Continuity of the service. Connection of drillings [xxxxx?-Trans.] to the
elevated Tank by Impulsion Pipe
Treatment of effluents. Quality of sewage Improvement to sewage Treatment Plant.
effluents.
XXXXXXX
Continuity of the service. Electromechanical repairs.
Adaptation and automization of the pumping xxxxx
9 DE XXXXX
Continuity of the service Drilling and equipping of 5 Production Xxxxx and
interconnection piping
Treatment of effluents. Quality of sewage Improvement to sewage Treatment Plant.
effluents.
PEHUAJO
Water quality Action aimed at improving water quality, for the
purpose of solving the arsenic problem. Includes
pilot studies for determining the most ["mas",
should be "mas-Trans.] appropriate alternative.
The Municipality (through the Health and
Preventive Medicine Department) will participate
in conducting the studies. Commencement of arsenic
treatment facilities.
Continuity of the service and pressure. Reduction of water not accounted for by the
Water not accounted for. implementation of network maintenance and leak
detection. Optimization of distribution networks
(Includes reconditioning of sections of the
distribution network).
Continuity of the service and water quality. Joint study by the Water Authority and Azurix on
the structural conditions of the water supply to
the city, in accordance with MOSP Order
No. 319/00, Art. 5.
RAMALLO
Continuity of the service. Electromechanical repairs.
Adaptation and automization of the pumping xxxxx
SUIPACHA
Continuity of the service. Electromechanical repairs.
Adaptation and automization of the pumping xxxxx
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Western Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE PLANNED ACTION
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BERISSO
Coverage of the service. Expansion of the Extension of drinking water service in the city.
service. Main water lines.
Continuity and pressure of the service. Reduction of water not accounted for by the
Water not accounted for. implementation of a plan for the detection and
correction of leaks
ENSENADA
Continuity and pressure of the service. Reduction of water not accounted for by the
Water not accounted for. implementation of a plan for the detection and
correction of xxxxx
XXXXXXXXX XXXXXX
Coverage of the service. Expansion of the Construction of networks for the extension for
service. drinking water service in Bosques Norte
Construction of networks for the extension of
drinking water service in San Xxxx and Santo Xxxxx
Drilling and equipping xxxxx for the extension of
drinking water service in Bosques Norte, San Xxxx
and Santo Xxxxx.
Continuity of the service and water quality. Drilling and equipping of five Production xxxxx
Evaluation of alternative supply sources
LA PLATA
Continuity of the service and water quality. Improvements to the Xxxxxx Xxxxxxxx plant. Repair
of the former pumping station, improvement of the
flow of water into it.
Reinforcement of the piping to Xxxxx Xxxxxx
Repair of distribution pipelines in old part of
the city.
Improvement of sewer service Extension of the sewer service in the city by the
connection of educational institutions.
Phase 1 of the overhaul of the Chlorination System
- Punta Lara
Treatment of effluents in Ringuelet. Improvements to the sewage Treatment Plant
Quality of sewage effluents.
CITY BELL
Continuity of the service and water quality. Drilling and equipping of Production Xxxxx and the
appropriate connection.
GONNET
Continuity of the service and water quality. Drilling and equipping of Production Well
Connection of Production Well to the network
XXXXX XXXXX
Continuity of the service and water quality. Electromechanical Repairs.
Repairs to infrastructure facilities
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Capital Region
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MEMORANDUM OF UNDERSTANDING
MINISTRY OF PUBLIC WORKS AND UTILITIES - AZURIX BUENOS AIRES S.A.
EXHIBIT: WORK AND ACTION PLAN - 2001
LOCATION OBJECTIVE PLANNED ACTION
-------- --------- --------------
XXXXXXXXX
Continuity of the service and water quality. Electromechanical Repairs.
Repairs to infrastructure facilities
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
PRESIDENTE XXXXX
GUERNICA
Continuity of the service and water quality. Electromechanical Repairs.
Coverage of the service. Expansion of the Commencements of sewer system facilities (networks,
service. Treatment of sewage effluents. pumping stations, sewage treatment plant). This
Quality of sewage effluents. will be up to the amount of $6,000,000 in 2001,
financed through the Provincial Trust - Law 12,511
PUNTA INDIO
PUNTA INDIO
Study of water resources and determination of
possible sources for supplying the area
XXXXXXXX
Continuity of the service and water quality. Electromechanical Repairs.
Repairs to infrastructure facilities
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
SAN XXXXXXX
XXXXXXXXX XXXX
Continuity of the service and water quality. Electromechanical Repairs.
Repairs to infrastructure facilities
Treatment of effluents. Quality of sewage Improvements to the sewage Treatment Plant
effluents.
SAN XXXXXXX
Continuity of the service and water quality. Improvements to the sewage Treatment Plant
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Capital Region