Spotlight: New era dawns in Brazil's sanitation sector

Brazil’s senate will soon vote on new sanitation regulations that give private players more room and could trigger new investments.

The lower house already approved the rules.

“After the senate approval, new rules will depend only on presidential approval and as investments in the sanitation sector, particularly from the private sector, are more than urgent, I don’t see a final approval taking too much time,” Frederico Araujo Turolla, an infrastructure expert at consultancy PEZCO Economics, told BNamericas.

Sanitation services gained importance during the COVID-19 outbreak, considering that nearly half the population lacks adequate access.

“Sanitation coverage indicators in Brazil are extremely poor, showing that the existing model, in place for decades, did not work,” Araujo Turolla added.

The government also expects that new rules will lead to higher infrastructure investments, alleviating the economic downturn.

“Sanitation rules will be among the first measures that we want to approve in congress after the end of this pandemic. That will generate a wave of investments,” economy minister Paulo Guedes said during a recent webcast. 

Meanwhile, development bank BNDES is working on the privatization of various sanitation firms, and concessions and PPPs in the sector are advancing, too.

BNamericas takes a look at the recent developments in the sector.

MATO GROSSO DO SUL

The board of Mato Grosso do Sul’s water utility, Sanesul, approved earlier this month a tender for a 3.8bn-real (US$748mn) sanitation PPP, covering 68 municipalities.

Sanesul is developing the notice and an auction will take place within 100 days of publication.

 “This is the most important step to achieve the goal that we have been pursuing since the beginning of our management, which is to make Mato Grosso do Sul the first state in the federation to have universal sanitation,” CEO Walter Benedito Carneiro Junior said.

Of the total investment, 100% private, 1bn reais will go to works and 2.8bn reais to the operation and maintenance of the sewage system.

The contractor will have to expand the system by 4,600km and build 85 sewage treatment plants.

ALAGOAS

In an auction planned for September 30, Alagoas state will offer a 35-year, 2.6bn-real sanitation services concession for capital Maceió’s metropolitan region.

The winner will have to provide full water supply within six years and take the sewage network to 90% of the population within 16 years.

Of the total investment, 2bn reais must materialize within the first eight years, benefiting 1.5mn residents.

RIO DE JANEIRO

Recently, a public hearing started regarding a concession model for services in 64 Rio de Janeiro state municipalities, involving a 33.5bn-real investment. The public hearing will end on July 8 and the auction will follow in the fourth quarter.

Under the model, structured by BNDES, additional 8.7mn residents will receive sewage treatment services and 1.6mn gain access to piped drinking water.

Only 88.4% of the population in the municipalities have running water, and supply is intermittent. In the areas under concession, the rate should reach 99% within 14 years.