More than half of Brazil’s 209.5 million people do not have access to water or sewer services.
With the Senate’s approval in June of the Water and Sanitation Framework Bill, Brazil kicked off a massive bidding process for the concession to run these services this and the coming years. Interested companies and funds—including CCR, Equatorial Energy, Vinci Partners and Patria—are already taking initial steps to prepare for the auctions. The state-owned Bank for National Economic and Social Development (BNDES) is in charge of formatting steak-with-bone concessions that combine highly profitable and less-profitable areas.
“None of the small cities, favelas or other vulnerable zones will be left behind,” says Fábio Abrahão, director of Infrastructure at BNDES. “The model we created allows the local administrations to form blocks of concessions to increase the competitiveness and will strengthen the regulation capacity of the Water National Agency [ANA],” he said during a recent life promoted by Valor newspaper.
The new law’s main objective is to provide universal access to water and sewage services by 2033 by attracting some US$150 billion in investment and stimulating competition. Currently, more than half of Brazil’s 209.5 million people do not have access to at least one of these basic services.
Despite the country’s chaotic administration and the present deep recession, water and sewage are deemed as the most attractive sector to investors, according to research recently published by Ernst & Young and the Brazilian Association of Infrastructure and Basic Industries (ABDIB). In parallel, the Ministry of theEconomy aims to sell four big state-owned companies this year: Eletrobras (energy), Correios (mail), the Port of Santos and Pre-Salt Petroleo (PPSA.)
The concession for the capital of Rio and the other 64 surrounding cities became a court matter due to resistance by Rio’s populist mayor, Marcelo Crivella. BNDES argues that 38 of these cities have already agreed that Rio’s utility, Companhia Estadual de Águas e Esgotos (Cedae), is unable to provide sewage services for 66% of the state’s 16.5 million inhabitants.