Rio Grande do Sul privatization ban is unconstitutional - expert

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Friday, October 21, 2011

A proposed ban on the privatization of water and sanitation services in Brazil's southern state of Rio Grande do Sul is unconstitutional, sanitation expert Luiz Augusto Rosa Gomes told BNamericas.

Municipalities in the state that are currently served by state-owned water utility Corsan are increasingly looking to hire out sanitation services to the private sector, a move that has met with resistance from authorities.

State governor Tarso Genro wrote to municipalities earlier this year to say that privatization of water services is unacceptable under any circumstance. Some local governments are now looking to make private concessions illegal under state law.

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"Municipalities throughout the state are banding together to create an amendment to the state constitution," said Gomes, who is sanitation director of engineering company Solví.

Of all Brazilian states, Rio Grande do Sul is one of the most fiercely opposed to privatization, the executive added.

The city of Uruguaiana closed the state's first contract with the private sector this year after legal disputes which started at the end of 2010. The city signed a 30-year concession with Odebrecht subsidiary Consórcio Foz de Uruguaiana that considers some 170mn reais (US$95.7mn) in investments.

Municipalities such as São Gabriel, São Borja, São Luiz Gonzaga and Santa Cruz do Sul are also considering privatization as they are reportedly unsatisfied with the service provided by Corsan.

Solví owns water utility Águas do Amazonas, which serves Amazonas state capital Manaus.