Brazil banks offer US$3.5bn waterworks financing

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Monday, January 23, 2017

Brazil's federal savings bank Caixa Econômico Federal (CEF) and national development bank BNDES have a combined waterworks budget of 11bn reais (US$3.47bn) for this year.

The amount jumped 140% from 2015, local paper Folha de São Paulo reported.

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The CEF budget has been raised to 9bn reais from 3.5bn reais, and BNDES' to 1bn reais from 672mn reais, while approximately 1bn reais is left over from CEF's budget for last year, which can be issued until the end of 1H17, the report said.

Many companies and local governments have been facing financial hardships over the past year and this could result in difficulties in qualifying for the loans.

"The increase is positive, but the states are in crisis," water utility association Aesbe president Roberto Tavares was quoted as saying.

Counterparty funding from foreign investors will also be needed, added Tavares, who is also the president of Pernambuco state water utility Compesa.

State water utilities are seeking regulatory changes such as the creation of a guarantee fund for the sanitation sector and the possibility of multi-city concession deals.

Meanwhile, the federal government is preparing technical studies for waterworks concessions in 18 states as part of the country's investment partnership program PPI.