Brazilian energy firm Equatorial enters sanitation sector through concession win

A consortium led by Brazilian energy company Equatorial Energia won the auction for a sanitation services concession in the state of Amapá.

The Marco Zero consortium’s winning bid for the 35-year contract was 930mn reais (US$180mn), much higher than the 50mn-real minimum set by the state government, and beating five other offers.

"The concession marks the company's entry into the sanitation segment and represents an important step in the group's growth strategy in the infrastructure sector, always seeking capital allocation discipline," Equatorial said in a statement.

The second highest bid of 427mn reais was from a consortium led by construction group Cymi Construções e Participações.

The other offers came from Aegea Saneamento, GBR Amapá and Conasa. 

A bid made by Saneamento Amapá was disqualified as it was below the minimum.

CONTRACT DETAILS, GOVT PLANS

The concession is for water and sewage services in the urban areas of the state’s 16 municipalities, which are currently provided by state-owned firm Caesa to around 750,000 people. 

Under the contract, Marco Zero must invest 3bn reais to expand and improve sanitation coverage. 

With the success of the Amapá auction, the federal government aims to convince other states in the northern region to press ahead with sanitation concessions. 

"I believe that the result of today's auction will show other states in the region how important it is to have the private sector participating in the projects. I'm in conversations with the states of Acre, Rondonia and Roraima and I hope to convince them to make concessions also," said Rogério Marinho, head of the regional development ministry, at the auction. 

Last year congress approved a major change to the sanitation sector’s regulatory framework, paving the way for more investments by private companies in a sector largely dominated by state-owned utilities.