Aegea wins US$700mn sewerage PPPs in Brazil

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Wednesday, November 23, 2016

Brazilian sanitation company Aegea has won two municipal sewerage concession contracts so far this quarter worth a total of some 2.38bn reais (US$700mn).

The most recent one was awarded on Tuesday and involves a 684mn-real tender launched by Espírito Santo state water utility Cesan in September, the utility said in a release.

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The 30-year public-private partnership (PPP) involves the expansion, operation and maintenance of the existing sewerage system in the city. Works include deploying 643km of wastewater pipelines and building and updating treatment plants and pumping stations.

Based on the lowest price per m3 of treated sewage, Aegea won the contract with a bid of 1.16 reais, approximately 18.3% below the ceiling price of 1.42 reais per m3, according to the release.

The Vila Velha Ambiental consortium, comprised by Aterpa, SAM Ambiental and Mauá Participações Estruturas, came in second, and the RioVivo Brasil consortium, formed by Rio Vivo Ambiental and CEJEN Engenhariaç, came in third.

They offered 1.22 reais and 1.25 reais per m3, respectively, according to the release.

Cesan's Vila Velha PPP auction (CREDIT: Cesan).

Meanwhile, Aegea has also submitted the best offer for a 31-year PPP to achieve universal water and sewerage service coverage in the metropolitan region of Piauí state capital Teresina.

Calling for 1.7bn reais in investments, one of the goals of the concession is to achieve 90% sewerage coverage in the city by 2031 before raising that rate to 100% by 2047. While municipal potable water supply coverage was 98% in 2015, sewage collection and treatment was only around 15%.

However, according to a report by local paper O Globo, the award of this concession is being disputed by local waterworks company Aguas do Brasil, which also bid on the contract.

While Aguas do Brasil offered a higher canon payment of 182mn reais, Aegea only offered 160mn reais. The bidding committee, however, awarded Aegea the contract due to its reportedly better technical proposal and this is what Aguas do Brasil is disputing.

The firm has complained to the state's audit court and is filing for a suspension of the concession process.