Brazil's Alagoas state kicks off US$550mn sanitation concession process

Northeast Brazil’s Alagoas state published the notices for concessions for water and sanitation services for 61 municipalities, which will require projected investment of 2.9bn reais (US$550mn).

The areas offered will be divided into two blocks.

The 35-year concession contracts, which were structured by development bank BNDES, are expected to be offered in an auction on December 13, the bank said in a release.

In September last year, water, wastewater and solid waste management company BRK Ambiental Participações, controlled by Brookfield Business Partners, won the water and sanitation services concession for Alagoas capital Maceió, offering a premium of 2bn reais. That concession comprises the other 13 municipalities in the state.

"We are confident of repeating the success achieved in the metropolitan region of Maceió, to benefit more than 61 municipalities and 1.3mn people, consolidating the case of Alagoas as a benchmark for projects of this size in the northeast, which, as well as the northern region, is a priority for BNDES regarding sanitation," said Fábio Abrahão, the federal bank’s BNDES concessions and privatizations director.

The notices can be seen at this link.

Last year congress approved a key change in regulations, paving the way for more investments by the private sector in a segment dominated by state-owned companies. Since then, a string of water and sanitation concession and privatization plans have been announced.

The upcoming Alagoas concession package is the fifth structured by BNDES under its program for the water and sanitation sector since the new regulations were introduced. It previously structured concessions in Cariacica, block A in Alagoas (Maceió), Rio de Janeiro and Amapá. 

"By the end of 2021, BNDES intends to structure projects for basic sanitation in at least six other Brazilian states, with planned investments of around 60bn, which will directly benefit more than 40mn Brazilians," the federal bank said.