France announces BRL 1 billion for energy and sanitation in the NE – 06/22/2023 – Market

The government of France signed agreements worth more than R$ 1 billion to finance projects in the areas of energy and sanitation in Northeast Brazil. The shares were signed on June 14th.

One of the bonds is with BNB (Banco do Nordeste do Brasil) in the amount of 150 million euros (about R$ 790 million). These resources should be used to finance sustainable infrastructure works focused on renewable energy and basic sanitation in the region where the bank operates —the nine states in the region and part of Minas Gerais.

The agreement was signed by the president of Banco do Nordeste, the former governor of Pernambuco Paulo Câmara, and the regional director of the AFD (French Development Agency), Laetitia Dufay, in Fortaleza.

The action encompasses projects involving solid waste management, renewable energy, basic sanitation and sustainable cities. In the energy area, the main focus is on wind and photovoltaic production.

“The resource had a greater focus on energy in that first moment. Sanitation was also part of the discussions”, says Wanger Rocha, financial director of BNB.

BNB’s agreement with the French government was signed after discussions of proposals, technical feasibility analyzes and meetings of European representatives with the financial institution.

For BNB, financing can help generate jobs and income for companies and workers, in addition to promoting greater access to services by the population in general.

“The Northeast, a region marked by inequalities and more exposed to the consequences of climate change, is a priority in our mandate”, said Laetitia Dufay, from the AFD, in a note.

The resources will be released according to the presentation of projects with the Banco do Nordeste by private companies. “We launch the resources to the market and then the market responds as the projects are presented”, explains Wanger.

In addition to transferring resources to BNB, the French Development Agency signed another agreement worth 50 million euros (R$ 260 million) with the Government of Paraíba for the sanitation sector.

The Companhia de Água e Esgoto da Paraíba intends to expand the sewage system in Cabedelo, in greater João Pessoa, and in Patos and Cajazeiras, in the interior of the state. For water supply, about 20 cities should be contemplated. In the package, there will be renovation of the water treatment plant and construction of pipelines.

The secretary of Infrastructure and Water Resources of Paraíba, Deusdete Queiroga Filho, says that the works can already be started at any moment, in view of the release of resources.

The financing has a 12-year payment period and a two-year grace period for the BNB. For the company from Paraíba, there will be a 15-year term with a five-year grace period. Projects must be completed within the funding period.

The Paraíba sanitation company intends to apply the resources in the area for the universalization of basic sanitation. The goal is to comply with the Sanitation Framework, which was approved by Congress during the Bolsonaro government in 2020.

The legislation underwent changes under the management of Luiz Inácio Lula da Silva, which were modified in the Chamber, in defeat to the Planalto Palace. The Federal Senate will still consider the matter on the legislation.

Two main points bothered the Chamber. The first extended the deadline for state sanitation companies to present guarantees of technical and financial capacity to carry out investments.

The second allows the direct provision of services by state-owned companies in metropolitan regions, urban agglomerations or micro-regions (subdivision of the state area).

The new framework provided for a new bidding process, in which the state-owned company would compete with the private sector to maintain the provision of the service in these cases.

Partnerships between the Brazilian and French governments tend to be more frequent in the Lula administration. This is because the Brazilian president has a good relationship with French leader Emmanuel Macron, a public disaffection of former president Jair Bolsonaro (PL).

This week, Lula fulfills agendas in Paris, France, after a tour with Italian political leaders and Pope Francis in Rome and in the smallest country in the world, the Vatican.

Lula and Macron met at the Élysée Palace, the official residence of the President of the French Republic.

On June 12, Lula received at the Planalto Palace, in Brasília, the president of the European Commission, Ursula von der Leyen, in another sign of rapprochement with European leaders. On the occasion, she promised investments of up to R$ 10 billion in Latin America.