Azurix

Azurix was a water and wastewater services company created by Enron Corporation in 1998. Its principal asset was Wessex Water, the British utility that Enron acquired for approximately $2.4 billion and placed at the center of a new international water-services platform. Headquartered in Houston, Azurix owned or operated water facilities, concessions, and related businesses in North America, Europe, and South America, with additional activities in Mexico and Ghana. Its scope included utility operations, infrastructure concessions, water-industry electronic commerce, and technology intended to support water-rights transactions. The company was formed during a period when energy and infrastructure groups were attempting to globalize regulated utility businesses and apply financial-market mechanisms to traditionally local services. Enron floated part of Azurix on the New York Stock Exchange in June 1999 while retaining a substantial minority stake. The initial public offering raised approximately $800 million. Although Azurix presented itself as a global water platform, the business faced difficult regulatory, financial, and operating conditions. In the United Kingdom, Wessex Water was subject to a mandatory rate reduction and required to undertake major investment in aging infrastructure. By the end of 2000, Azurix had substantial debt relative to its operating profit, while the stock price had fallen sharply from its offering level. Azurix's most consequential overseas investment was a 30-year water and wastewater concession in two regions of Buenos Aires Province, Argentina. In June 1999, the company bid approximately $438 million for the concession. The arrangement became contentious, and Azurix later alleged that the provincial government had committed serious breaches of its obligations. In October 2001, the company announced that it would withdraw from the contract, effective January 2002; the concession was formally terminated in March 2002. Azurix then brought an investor-state arbitration claim against Argentina under the ICSID system. An arbitral tribunal awarded compensation in 2007, with published accounts describing the award as approximately $156 million or $165 million. An ICSID annulment committee affirmed the award in September 2009, making the decision final within the arbitration process. Argentina's continued nonpayment led Azurix to pursue additional legal and trade-policy measures, including a petition to the United States Trade Representative concerning Argentina's eligibility for Generalized System of Preferences benefits. The company's corporate life was short. Rebecca P. Mark, who led Azurix during its formation and expansion, resigned in 2000, after which John L. Garrison became chairman and chief executive officer. In April 2001, Enron announced plans to break up Azurix and sell its assets. Wessex Water was sold to Malaysia's YTL Corporation in May 2002, while Azurix North America and Azurix Industrial Operations were later sold to American Water Works for $141.5 million. The Argentina arbitration remained the principal surviving corporate matter for years afterward. Azurix also maintained a separate arbitration connected with an earlier investment in Mendoza Province, which was suspended as of August 2010. Azurix is therefore chiefly remembered as an ambitious but unsuccessful attempt to build a global private water utility through acquisitions, concessions, and financial-market infrastructure.

Azurix emerged from Enron's effort to establish a large international water-services business. In July 1998, Enron acquired Wessex Water, a British utility, in an all-cash transaction reported at approximately $2.4 billion. Wessex became the operational foundation of Azurix. At the time of its sale, Wessex was a profitable utility, but its future prospects were constrained by United Kingdom regulatory requirements, including a mandated reduction in customer rates and the need for extensive investment in aging infrastructure. Azurix was organized as a separate water-services company and expanded through a mixture of acquisitions, concessions, joint ventures, and new technology projects. In June 1999, it completed a partial initial public offering on the New York Stock Exchange, raising approximately $800 million while Enron retained 34 percent. The stock opened at $22 per share but fell to approximately $2 within two years, reflecting investor concern about the company's debt, operating performance, and exposure to difficult regulated markets. Azurix operated or held interests in facilities in North America, Europe, and South America. Its activities included a 30-year water and wastewater concession in Cancun, Mexico, Mexican joint ventures, and a build-operate-transfer contract in Accra, Ghana. The Argentine concession became the defining episode in Azurix's history. In June 1999, the company bid approximately $438 million for a 30-year concession covering two of the three service regions in Buenos Aires Province. The concession excluded Buenos Aires city, where a separate operator held the relevant contract. Relations between Azurix and the provincial authorities deteriorated. In October 2001, Azurix announced that it would withdraw from the concession from January 2002, alleging serious breaches by the provincial government. The concession was terminated in March 2002. Azurix subsequently initiated proceedings against Argentina before the International Centre for Settlement of Investment Disputes under the case commonly identified as Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12. Azurix also pursued digital and financial extensions of its water strategy. Waterdesk.com was designed as an online business and information portal for Europe's water sector, including weather and industry news features. Water2Water.com was intended to support online commerce with Latin American businesses. The broader concept was to enable market participants to exchange water-rights contracts and manage related risks, echoing Enron's electronic trading ambitions in energy markets. A pilot project was also initiated in the Lower Rio Grande before Rebecca Mark's departure. The corporate strategy failed to generate a sustainable global utility business. In April 2001, Enron announced that it would break up Azurix and sell its assets. Azurix's British holding was sold in May 2002 to YTL Corporation of Malaysia. American Water Works later acquired Azurix North America and Azurix Industrial Operations for $141.5 million. These disposals effectively ended Azurix as an operating international water company. The Argentine arbitration continued after the operating business had been dismantled. The tribunal awarded compensation in 2007; sources describe the amount as approximately $156 million or $165 million, while the company's investment and claimed damages were substantially higher. In September 2009, an ICSID ad hoc annulment committee affirmed the award. Azurix alleged that Argentina had not complied with the decision and, in December 2009, petitioned the USTR to review Argentina's eligibility for the U.S. Generalized System of Preferences program. USTR agreed to hear the petition in 2010, and Azurix presented its position at a September 28, 2010 hearing. A separate Mendoza-related arbitration was suspended as of August 3, 2010. Azurix's legacy is consequently tied less to a continuing consumer brand than to the rise and collapse of Enron's water strategy and to the long-running investment dispute with Argentina.

• 2010

  USTR hears Azurix's GSP petition

  [1]Azurixen.wikipedia.org

  Azurix presented its case for trade consequences against Argentina over nonpayment of the arbitral award.

• 2009

  ICSID annulment committee upholds the award

  [1]Azurixen.wikipedia.org

  The annulment committee affirmed the award, concluding the principal ICSID review process.

• 2007

  ICSID issues an award in favor of Azurix

  [1]Azurixen.wikipedia.org

  An international arbitral tribunal awarded compensation in Azurix's dispute with Argentina over the Buenos Aires concession.

• 2002

  Wessex Water is sold

  [1]Azurixen.wikipedia.org

  Azurix sold Wessex Water to YTL Corporation of Malaysia.

• 2001

  Enron announces the breakup of Azurix

  [1]Azurixen.wikipedia.org

  Enron announced plans to dismantle the company and sell its assets.

• 2000

  Leadership changes after Rebecca Mark's resignation

  [1]Azurixen.wikipedia.org

  Rebecca P. Mark resigned, and John L. Garrison became chairman and chief executive officer.

• 1999

  Azurix completes its initial public offering

  [1]Azurixen.wikipedia.org

  Azurix was partially floated on the New York Stock Exchange while Enron retained a 34 percent stake.

• 1999

  Buenos Aires Province concession is awarded

  [1]Azurixen.wikipedia.org

  Azurix won a 30-year water and wastewater concession covering two regions of Buenos Aires Province.

• 1998

  Enron acquires Wessex Water

  [1]Azurixen.wikipedia.org

  Enron acquired the British utility Wessex Water, which became the central asset around which Azurix was formed.

A global private-sector water and wastewater platform combining regulated utility ownership, infrastructure concessions, industrial operations, and financial or electronic-market services for the water industry.

• Water utility · 1998

  Wessex Water

  Wessex Water was Azurix's principal British operating asset and the foundation of its international water strategy. The business supplied water and managed wastewater services in its regulated territory. Its financial profile was pressured by regulatory rate reductions and the need for major infrastructure investment. Azurix later sold the utility to YTL Corporation in 2002.

• Water and wastewater concession · 1999

  Buenos Aires Province concession

  This 30-year concession covered water and wastewater services in two regions of Buenos Aires Province, Argentina. Azurix won the concession in 1999 but withdrew after a dispute with the provincial government, alleging serious breaches of the government's obligations. The concession was terminated in March 2002 and became the basis for Azurix's ICSID arbitration claim.

• Water and wastewater concession · 1999

  Cancun concession

  Between 1999 and 2002, Azurix owned and operated a 30-year water and wastewater concession in Cancun, Mexico. The concession formed part of the company's broader attempt to assemble an international portfolio of private utility and infrastructure interests.

• Digital water-industry platform

  Waterdesk.com

  Waterdesk.com was conceived as an online business and information service for the European water industry. The platform was intended to support online transactions involving water-related contracts and to provide users with weather and industry-news features. Its design reflected Enron's wider effort to apply electronic commerce and financial-market tools to utility sectors.

• Digital commerce platform

  Water2Water.com

  Water2Water.com was developed for Latin American businesses to transact online with Azurix. It was part of the company's effort to digitize commercial relationships in the water sector and extend the reach of its operating and trading model.

• 2009

  Azurix petitions for review of Argentina's trade preferencesOther

  Background

  Azurix alleged that Argentina had failed to voluntarily comply with the final ICSID award.

  Action taken

  The company asked the USTR to examine Argentina's eligibility for the Generalized System of Preferences program.

  Aftermath

  USTR accepted the petition for review and heard Azurix's arguments in 2010.

  Source

• 2001

  Enron decides to break up AzurixStrategy

  Background

  Azurix faced weak market performance, substantial debt, regulatory pressure, infrastructure requirements, and difficulties with major concessions.

  Action taken

  Enron announced that it would dismantle Azurix and dispose of its assets.

  Aftermath

  Wessex Water was sold in 2002, and Azurix's North American and industrial operations were later sold to American Water Works.

  Source

• 2001

  Azurix announces withdrawal from Buenos Aires Province concessionStrategy

  Background

  Azurix reported serious breaches by the Buenos Aires provincial government and concluded that continuing the concession was not viable.

  Action taken

  The company announced that it would withdraw from the contract from January 2002.

  Aftermath

  The concession was terminated in March 2002, followed by an ICSID claim against Argentina.

  Source

1. 1Azurixen.wikipedia.org
2. 2Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12icsid.worldbank.org