Brazilian State Takes Back Control of Water Utility

A southern Brazilian state plans to take over management of a water utility in which French conglomerate Vivendi Universal has a minority stake.

Parana state Gov. Roberto Requiao issued a decree last week revoking a contract signed by his predecessor that gave Domino Holding — in which Vivendi has a stake — management control of Sanepar, the state's water utility.

The move came amid complaints about water quality. Parana state has a 60 percent controlling stake in the water utility.

According to Parana state's official Web site, Vivendi President Olivier Orsini is scheduled to meet Requiao in Brazil today to discuss the transfer of technology to Sanepar. The statement did not say whether the change in management control would be discussed. Officials with Vivendi and Parana state could not be reached by The Associated Press yesterday for comment.

The decision could unnerve already wary foreign investors, who last year pulled billions in investments out of Brazil over fears that the country's first elected leftist president would enact policies leading to a default on the country's massive foreign debt.

Since taking office Jan. 1, President Luiz Inacio Lula da Silva has made efforts to try and assuage investors' concerns, including appointing fiscal moderates to key cabinet posts.

Source: The Associated Press