Argentina Azurix / Enron Halts Contract

BUENOS AIRES, Argentina (AP) - An Argentine unit of bankrupt Enron Corp. canceled a water and sewage contract with the country's largest provincial government Monday, citing a breach of contract, company officials said.

The waterworks subsidiary Azurix had signed a contract with the Buenos Aires province to provide water and sewage services to some 2.5 million people.

In a statement, the company said it would close down its plants employing some 1,300 people on March 1 and return the concession to the government.

``We have concluded the conditions of the contract were not met,'' the statement said, blaming the provincial government for the closure of the plants.

The move was largely seen as the first step toward declaring bankruptcy, and comes amid a four-year recession and deep economic turmoil in South America's second-largest economy.

The country's national and provincial governments are struggling to meet their obligations after Argentina defaulted on its $141 public debt in December. Buenos Aires province is Argentina's most indebted province.