Government of SP will hire the World Bank to study the privatization of Sabesp, says Tarcísio – 03/03/2023 – Market

The government of São Paulo is going to hire the International Finance Corporation (IFC), an arm of the World Bank, to structure studies for a possible privatization of the São Paulo sanitation company Sabesp, governor Tarcísio de Freitas said this Friday (3).

“Sabesp’s privatization is a super complex matter. We are going to hire the structurer in the next few days, it will be the World Bank, IFC”, Tarcísio told Reuters after participating in an event by the South and Southeast Integration Consortium (Cosud), in Rio of January.

“We are going to start the studies and we are going to take Sabesp forward if we reach the conclusion that we are going to increase efficiency, have upside, reduce tariffs, we are going to shorten the period for universalization of services, and I think that all these objectives are possible and I understand that the study will show that,” he added.

According to the governor, after the study is presented, the government will enter into an agreement phase with the municipalities served and seek understanding with the State Legislative Assembly. He said that the idea is that the privatization process, which can happen along the lines of the capitalization of Eletrobras carried out in 2022 by the federal government, can be done in 2024.

“I believe it is an operation for next year”, stated Tarcísio.

The Board of Directors of the State Privatization Program of São Paulo authorized on Tuesday the contracting of studies on the privatization of Sabesp.

The governor explained that the “great value of Sabesp” is in the contracts that the company has with municipalities, especially the larger ones. The extension of the concession contract for these contracts generates a “value upside”, which could be used to reduce tariffs and expand service coverage, he said.

“We can capture the grant, signature bonus, that is, the sale value of the shares, to distribute between the State and municipalities and also to apply in municipalities not served by Sabesp”, he said. “That’s why I understand that we can advance a lot in sanitation with resources generated by Sabesp.”

Currently, sanitation coverage in São Paulo is over 90%, according to the governor, but there are still shortages, especially in the more peripheral regions. “It is in them that we need to increase the binding capacity,” he said.