Brazilian states set to promote sanitation PPPs after elections

Tuesday, July 24, 2018

State governments to be elected in Brazil's October election will likely be sympathetic to public-private partnerships for sanitation projects.

"There is no room for [utilities] state-run companies to increase tariffs in real terms in the short term, to finance projects, so the way for this will be states to assume more PPPs," Bruno Pereira, a partner at Brazilian consultant firm Radar PPP, told BNamericas.

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Brazilians go to the polls in October to vote for the next president, state governors and legislators who will assume their respective posts in January 2019.

According to Pereira, the laste election already pointed to this positive trend for PPPs. During the 2014 municipal elections, for example, Brazilians voted in most cities for candidates who defended PPPs openly, as in the country's largest city São Paulo, where PPP and privatizations enthusiast Joao Doria won decisively.

The recent provisory measure signed by President Michel Temer to attract more private sector investment in sanitation projects, Pereira thinks, is a step into the right direction.

"The current rules for the sanitation sector in Brazil were elaborated decades ago and this needs to be updated. I think that those new measures tend to attract more investors and private sector companies for the sanitation sector in Brazil," said Pereira.

"In the past, Brazilians were totally closed regarding the private sector in the sanitation area, but due to the lack of investments and the failure of state-run companies to promote the universalization of the service, people are supporting the entrance of the private sector in this segment."