INTOSAI Working Group on the Audit of Privatisation

ADDITIONAL PAPERS FOR THE SEVENTH MEETING
BUENOS AIRES, 18 and 19 SEPTEMBER 2000

Users

Paper by the Supreme Audit Institution of Argentina (Auditoría General de la Nación)

DR. CESAR ARIAS - Auditor General

When each one of us, among other things, switches on a light, turns a faucet open, takes a train or bus, or talks on the phone, we are taking up the role of users or consumers, possibly unaware of the rights that this important social institution has been incorporating through time during this last century.

The use of the word "USER" has been recognised as being tightly linked to the use, usufruct or enjoyment of public property and, under this light, it is relevant to state that the term derives from the Latin word "usuarius"on the understanding that it refers to the person who "has the right to use other people's property within certain limitations or who, by Governmental concession or other legitimate right, enjoys the use of the water coming from public currents".

The Argentinian jurisprudence has described "user" as the person who is beneficiary of a public utility, accentuating the recipient or usufructuary of such institution.

What is the point in the existence of such thing as USERS' PROTECTION?

We know that, on the one hand, public utilities have a huge impact on the population's standard of living and on the whole economic system which encourages, as we have seen before, both a regulatory and a controlling action that the Constitution (in its Article 42) defines as a State's obligation complied not only through specific Regulatory Authorities but also through the other "authorities" in the broad sense that the word is employed in Article 42 of the Constitution.

On the other hand, we are as well aware of the social and economic reality of our time. Thus, the general consumer (and particularly the public utilities user) is in a situation of structural weakness opposite to the service' supplier, due to his lack of organisation, to the fact that the necessary information is not as available to them, due also to their lower purchasing power, etc. As JOHN KENNEDY said during his message to the Congress on March 15th, 1962: "Consumers are the only economic agent that are not organised in an effective way and whose points of view are often not heard".

Regarding the aforesaid, we can distinguish three levels of User's Protection: NORMATIVE (CONSTITUTIONAL, LEGAL AND REGULATORY FRAMEWORKS), ADMINISTRATIVE and JUDICIAL.

The NORMATIVE protection seeks to determine "WHAT" is being protected: the rights of public utilities users. Such rights are stated in our NATIONAL CONSTITUTION (articles 42 and 43), in the CONSUMERS'S DEFENCE LAW (Law 24.240) and also in the REGULATORY FRAMEWORKS (Specific Laws and relevant Regulations, specially the User-related Regulations) of each utility (in this case, the domiciliary services).

The ADMINISTRATIVE AND JUDICIAL Guardianships address to determine "HOW" to protect the rights established in the standards. These thus conform the instrument or practice that enables the user to demand, should there be any kind of violation to his rights, a refund, for a reparation or validation, through any of the alternatives each level of these "instrumental" guardianships contains.

It can be easily noticed that the success of the NORMATIVE guardianship relies on the seriousness, solidity and effectiveness with which the ADMINISTRATIVE and JUDICIAL guardianships are applied and complied with on a daily basis. There is no use in establishing rights in favour of the weakest if these cannot be daily asserted due to lack of efficiency or to the fact that the stipulated instruments for the validation of its prerogatives are not being efficiently applied.

Accordingly, considerable progress has been made in terms of the law regarding the active legitimation and defence of the user's rights. Hence, our future commitment will be to fight for the best possible development and validity of the various guardianships the users have.

1. Normative Guardianship

1.1 National Constitution

Article 42 essentially shapes the supralegal recognition of the general users and consumers rights.

Although Law 24.240 on Consumer's Defence, which apart from establishing very important principles about the right of consumption (the most favourable interpretation in favour of the consumer, the right to obtain truthful and sufficient information, to name a few) is pre-existent to this article, it also stipulates specific obligations concerning public utilities. However, this does not mean that the constitutional warrant, expressed in article 42, is less important, for it constitutes a wise examination of the changes that took place in our country right before our Constitutional Reformation.

As a consequence of the Reformation that has been carried out since 1989, public utilities, for operational purposes, were destined to private license holders to whom certain privileges were granted because this was, at that time, considered to be the most convenient thing to do so as to accomplish a better supply of the services.

Thus, services supplied in monopoly conditions (that is to say, public utilities) will have to be supplied with "QUALITY AND EFFICIENCY" and will be submitted to control regarding their compliance with the obligations laid down in the "REGULATORY FRAMEWORKS OF PUBLIC UTILITIES OF NATIONAL COMPETENCE".

The jurisprudence has expressed the importance of article 42 and of the rights it stipulates. Its importance has also been highlighted by the XII National Lawyer's Conference, stating that "All the people of our country are users and consumers and article 42 of our National Constitution assumes the right to have access to consumption as a primary bare necessity of all the sectors of our population".

As regards the ADMINISTRATIVE GUARDIANSHIP, the existence of Public Utilities Control Bodies is provided by the Constitution, as well as efficient procedures to prevent and solve conflicts (referring to complaints, conciliation and arbitration procedures within this guardianship) and it also provides Consumers and Users Associations (art 42). Besides, it grants the Auditoría General de la Nación with constitutional rank (art. 85) defining it as the body that is to perform external control over the National public sector and over the Regulatory Bodies of Public Utilities as well as the private bodies that were successful bidders during privatisation procedures. The AGN also audits the obligations arising from the relevant contracts (art. 117 of Law 24.156) and the Ombudsman (article 86) who should defend and protect human rights, as well as other rights and interests provided by the Constitution and the Law, from actions or omissions the Administration may have incurred into as well as exercising control over the public administrative duties.

With reference to the JUDICIAL GUARDIANSHIP, apart from the above mentioned regarding efficient procedures to prevent and solve conflicts, article 43 broadly establishes the category of protection as a procedural channel to protect those rights related to environmental issues as well as the user and consumer, free competition and the category of collective rights. The latter betters the classical concept of "subjective right", as far as the active procedural legitimation is concerned, in accordance with the newest rights acknowledged in 1994's Reformation.

Besides, the quoted article awards a broad active legitimation, both to the interested person as to the Ombudsman (also in article 86) and to those associations tending to those purposes encouraging the lodging of a protective resource.

1.2 Legal (Law 24.240 of Consumer's Defence and Legislation on Consumption)

Besides the specific regulations granted by the regulatory frameworks to each section of the privatised public utilities, creating thus a more particular protection for the specific user of the service covered by that set of standards, there are also laws which generically exercise a defensive function towards consumers and users. In this respect, these laws can be asserted, if appropriate, with regard to public utilities. These standards make up what we call "LEGISLATION ON CONSUMPTION" or "NORMATIVE FRAME OF CONSUMERS AND USERS RIGHTS"

In any case, the main standard on this protective level is undoubtedly, Law 24.240 on Consumer's Defence, which grants the domiciliary public utilities user with a generic protection, applicable to all of them.

Nevertheless, it is possible to say that the general standards and principles contained on Chapters I and II of the Law, are also applicable to these users. The above mentioned refer to general provisions and to the information available to consumers as well as Health Care, based on the principle "in dubio pro consumidor", established by Art. 3 of the law.

Regulatory frameworks

This is the last of the normative guardianship levels. We can briefly point out that it is composed of a frame law for the area, which, for example, states the various system's agents, gives the legislative category of "public utility" to different activities, establishes specific categories for each service, creates a particular Regulatory Body for the area as well as delimitating its duties, faculties and the structure of its authorities, etc. It is also composed of a Regulation Act, the Foundations and Specifications of the Bidding through which the privatisation process of the business or businesses that were formerly responsible for the supply of the utility took place, the Concession or Transfer Contract or a Model of License or Permit for the development of the activity and the various resolutions issued by the Regulatory Authority of the area, practising the power invested in it to set rules and standards. As regards the latter, we could briefly mention the Rules for the Service, Rules for the User as well as other rules regarding certain aspects of the service supply and Complaints Procedures in favour of the user, Penalties Systems, etc.

With respect to one of the main components of the Regulatory Framework, the RULES AND STANDARDS FOR THE SERVICE AND/OR THE USER, this essentially applies to the relationships between the service suppliers and the users, setting the duties and rights of each part as well as the various forms of supply and service, users categories, conditions of access to the service, various terms and schedules. These usually also establish the different complaints' procedures so that the user can take the necessary steps before the Regulatory Body.

2. Administrative Guardianship

The "ADMINISTRATIVE GUARDIANSHIP" for the user consists of:

  1. The Regulatory Bodies: All the Regulatory Frameworks provide that the Bodies, as Regulatory Authorities with its control and sanction faculties, invested with the power to be a police force over the matter of their competence, must perform a constant control work of the degree of efficiency with which the license holder or concessionary supplies the service as well as the technical and commercial quality of the product that is being supplied. Besides, they should also control that mandatory and non-mandatory investment plans are being complied with, that the service facilities are regularly being given maintenance, that complaints procedures in favour of the users are being run by the Companies and also check the timetable against which they are solved. Finally, it must also regularly require from the concessionaries the information it needs to fulfil its goals.

    2. The aforesaid is thus an indirect way of protecting and defending the user since this goal is met by fulfilling this duty without any direct initial involvement of any particular user.

  2. This guardianship also includes the protests and complaints presented before the Ombudsman, provided at the national level by article 86 of the Constitution and by laws 24.284 and 24.379. Hence, he can intervene in favour of the rights established in our law regarding protection and defence issues. Among the quoted rights, we would like to highlight those stated in article 42 of the Constitution.
  3. The Auditoría General de la Nación (Argentina's Supreme Audit Institution) constitutes, through its external control duties over the public sector (Article 85 from the Constitution), a body of indirect user's protection. Article 117 of Law 24.156 (Financial Administration and National Public Sector Control Law) establishes that the AGN, within its competence, must control public services' Regulatory Bodies as well as private bodies who were the successful bidders at privatisation processes, with respect to the obligations arising from the relevant contracts.

    4. Among the main control duties of the AGN in the audits it performs on this issue, it is possible to highlight those related to: legality control of the administrative, jurisdictional, regulatory and penalising functions' performed by the regulatory bodies, examination, description, application and progress of the price regime set during the privatisation process, performance audits to assess the supervisory tasks of the Regulatory Bodies, assessment of the effectiveness and efficiency of the relevant Body, etc. Its duties also encompass those tasks related to users' complaints systems through its management circuits and the detection of possible deviations from the stipulated procedures as well as the efficiency and effectiveness standards for the activity. It also checks that penalties systems are being carried out with regard to the privatised businesses as well as the way in which suppliers supervise investments, etc.

  4. With reference to those instances external to the public sector, we will mention, in the first place, the Complaints presented before the Public Utility Supplier Business itself, given the fact that the first possibility the user has in the presence of any anomaly or damage related to the service, is to bring this matter up before the one who is most likely to be responsible for it: the concessionaire itself.
  5. Another possible guardianship has to do with the user's faculty to turn to Consumers' Associations. These are non Governmental organisations that are in a position to advice and assist the users regarding questions and complaints they might have, in order to arbitrate a conciliation with the service supplier business. As established on art.58, "in fine", of Law 24.240, the duties of these associations are strictly conciliative and extrajudicial for their purpose is solely that of facilitating an approach between the parts.

3. Judicial Guardianship

This distinction is essential to the user considering that, due to the current status of the judicial system in our country and also to the lack of more simple, less onerous judicial procedures destined to tend consumers issues (i.e. Local Law, etc). Thus, the fact that the user should turn to the Judicial Power represents a decision of main importance for him since he will have to go through those vicissitudes we are all familiar with.

Among the assumptions that might qualify for this guardianship level to be exercised or even make it indispensable, we would like to point out: