Brazil's BNDES to structure more sanitation concessions in Alagoas

Brazilian development bank BNDES said on Friday it will structure more concessions for water and sanitation services in the northeast state of Alagoas following the recent success with the auction of services in state capital Maceió’s metropolitan region. 

BNDES said it will structure a concessions model for sanitation services in 88 municipalities in the state, benefiting 2.2mn people. 

"In this project, the concession of water and sanitary sewage is divided into two groups: blocks B and C. The first covers 48 municipalities. Block C includes 40 other municipalities in the eastern regions," BNDES said in a release.

"The expansion of sanitation services to the countryside of the state is expected to impact 60% of the population of Alagoas," added the bank, underscoring that the mayors of all the municipalities need to approve the concession plans.

The move comes after water, wastewater and solid waste management company BRK Ambiental Participações, controlled by Brookfield Business Partners, won the concession for Maceió.

The company offered a premium of 2bn reais (US$372mn) in last September’s auction.

The minimum the state government asked for the 35-year concession was 15mn reais. Required investments will be 2.6bn reais to improve services for 1.5mn people in the metropolitan region’s 13 municipalities.

Six other groups also submitted offers. 

Investor interest in sanitation projects in Brazil rose after last year’s approval of new sanitation regulations that are expected to trigger investments and pave the way for more participation of private sector players. 

BNDES is currently working with other local governments to structure concessions in the sector. 

"By the end of 2021, BNDES intends to structure projects to improve water and sewage services in at least nine Brazilian states. The planned investments will be in the order of 50bn reais, with direct benefits for more than 30mn Brazilians," the bank said.