Brazil's top 3 sanitation firms up investment plans to US$8.6bn

Bnamericas Published: Friday, January 06, 2023
Brazil's top 3 sanitation firms up investment plans to US$8.6bn

Brazil’s biggest public sanitation firms – São Paulo’s Sabesp, Minas Gerais’ Copasa, Paraná’s Sanepar – are planning to increase 2023-27 investments by 14.2% to a total of 46bn reais (US$8.6bn).

For the 2022-26 period, projected investments totaled 40.3bn reais.

Reforms in 2020 facilitated private participation through concessions, transforming the sector profoundly. Analysts expect private firms to help pour 750bn reais into the sector to achieve adequate universal coverage by 2033.

However, state-run companies still dominate, with private firms holding around 10% market share.

The higher investments by public companies come as government members are proposing revising regulations, including measures that strengthened watchdog ANA. But market players have reacted negatively, since a weaker watchdog would have problems to monitor promised investments, putting the coverage goal at risk.

"In theory, all companies that passed through the filter of economic-financial capabilities are able to reach the universalization goal. It is necessary, however, that contracts are monitored throughout the concession period and that the intermediate targets are verified. As they are long-term contracts, the presence of a strong and autonomous regulatory agency is highly important," Christianne Dias Ferreira, former head of ANA and a partner at infrastructure advisory Vallya, told BNamericas.

The governors of São Paulo, Minas Gerais and Paraná have confirmed their commitment to the privatizations of these states’ water utilities. "The privatizations will depend a lot on a combination of factors, including reliable data, especially from an accounting point of view, and, above all, political will," said Ferreira.

BNamericas provides an overview of the respective investment plans and the privatization prospects.


São Paulo state’s Sabesp seeks to invest 26.2bn reais by 2027. Of this total, 8.9bn reais will go to supply projects, 12.4bn reais to sewerage collection and 4.84bn reais to wastewater treatment.

Sabesp is Brazil's largest water company in terms of revenues and population served. It supplies 28.4mn people with water and 25.2mn with sewerage services.

Providing details of the planned privatization recently, governor Tarcísio Gomes de Freitas said private investors will be offered a controlling stake via a share offering, with the state retaining a minority stake. São Paulo currently holds 50.3%, while the remaining shares are traded.

However, a privatization timetable has not been revealed.

Privatization was attempted previously but abandoned due to opposition from the public and lawmakers, saying a privatization is unnecessary because Sabesp retains robust cash generation and investment capacity.


Minas Gerais’ Copasa will invest 8.10bn reais, “in line with the company's business plan, its contractual commitments, as well as meeting the universalization targets proposed in the new sanitation framework,” according to a press release. If states fail to reach the 2033 coverage goal, they could lose access to federal financing.

Copasa’s coverage ratio is 99.4% and its sewage collection and treatment ratio is 90.5%.

Reelected in October 2022, governor Romeu Zema said he will try to privatize Copasa during his second term.

In a recent interview with BNamericas, Copasa president Guilherme Duarte said privatization would faciliate compliance with the universal coverage target.

"The decision to privatize is made by the company's controller, the state government. But my personal perception is that all possibilities could be evaluated. However, in addition to the controller's decision, privatization also needs the approval of the state legislative assembly. That is, the government, through a technical argument, will have to build this dialog with state legislators," he said.

Copasa provides water services to 11.8mn people and sewage services to 8.5mn. Coverage for water services is 99.4% and for sewage services 71.9%.


Paraná’s state water firm will invest 10.7bn reais, 6.5bn reais of which will go to sanitary sewage. The volume is being invested with a view toward the 2033 goal.

Sanepar's current service rate is 77%, with 100% of the collected material being treated.

Governor Carlos Massa Ratinho Jr., who was reelected for a second term though 2026, said several times during his first term that he favored privatization.

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