ECONOMY-ARGENTINA: Consumers Complain at Cost of Privatization

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Mar 2 1998 (IPS) - Consumer complaints are increasing over the higher costs of public services, formerly provided by state-run enterprises, since privatazation began at the beginning of the decade.

In the old days, there were few complaints because, in addition to having to wait in a long line, those persons complaining almost never got a response, says Claudia Collado, a lawyer for the Association for Defense of Consumers (ADELCO). Today, however, with the transfer to private hands of companies that provide water, electricity, gas and telephone services, ADELCO asnd other consumer protection have been swamped with complaints from users and requests for intervention.

This is logical, says Collado, as users understand that private companies have a responsibility to respond to claims.

Last year, 23 percent of the complaints were about problems in the cost of basics services, followed by complaints about instalment plans for the purchase of automobiles, interest rates on credit cards, and the quality and costs of repairs for household appliances.

Defenders of consumers’ rights say that people no longer remember that it was only 10 years ago when the price of a home varied according to whether it had a telephone or not, there was less gas in winter, and scheduled cuts in electricity in order to save energy.

“Now, clients are more demanding; they want good service and they don’t want to be cheated”, said Collado. She said most complaints related to the cost of services.

In the case of telephone services, the state company was transferred to two conglomerates which divided up the market. Users cannot switch providers until at least the year 2000.

By then, the rights to exclusivity are supposed to expire but the companies already have requested a three-year extension – which the government appeared ready to concede. The telephone companies have been among the most profitable of the new private concerns during the past four years.

In 1997, users lost a battle against what the telephone companies dubbed a “re-balancing”, in which the government authorized the companies to increase the cost of local calls and decrease that of international calls.

Clients filed complaints and initiated lawsuits which are currently being analyzed in the Supreme Court. According to Collado, the ruling will most likely benefit the companies, which are already charging the new rates.

Other common complaints are about charges for services which users say were never provided. One example is a lawsuit filed by a 90-year-old woman, who got a bill for 900 dollars for hundreds of calls made to a sex line in Sierra Leone.

There are also many complaints about the cost of international calls or calls to television programs, which users claim they never made. These calls like those made to 0-600 lines “to make friends,” hear the voices of famous people or to consult a horoscope are more expensive than regular calls.

When the problems started, the companies ordered their representatives to say “first pay, then complain,” but the high amounts of some of these bills have forced them to change that policy.

In the case of companies that supply water, where users are also subject to monopolies, the costs are too high, according to ADELCO. The cost of connecting services should not be higher than 120 dollars, ADELCO argues, yet companies are charging between 600 and 1,000 dollars.

Consumers’ complaints already have forced the revision of one companies operations. For the first time, the company agreed to return some of the money paid for connections and agreed to fix the price at 120 dollars, as determined by ADELCO, and low-income users will have the option of paying in five monthly installments. In return, the government agreed to let the company charge its clients a fixed bi-monthly fee of four dollars, which will go toward “environmental improvements.”

The company argues that this is not an increase in the price of the service, but a group of consumers complaints are being heard from users who argue that a private entity should not pay the same amount for environmental conservation as a company that dumps waste into the rivers.

Protests have also had an impact on gas companies. In 1997, private companies bought more gas than was consumed by clients, in part due the mild winter, for which the government allowed the companies to charge extra this year, in order to cover for their financial deficit.

Collado explained that consumer protections groups, created to monitor private companies, do not always do their job, especially those who were created by presidential decree, like those which regulate the water and telephone services.

“The president of the telecommunications entity, an office which is funded by the sector’s private companies, said that in the last days of 1997 he had only one complaint related to calls to a sex line. But we have presented dozens of complaints every day”, said Collado.

Electric companies are the ones which have received the fewest complaints, as the cost of services decreased 10 percent after it was privatized. However, they charge a 10 percent penalty to users who pay late for the second time, even though the annual inflation is less than one percent.