Government reviews strategy and expands negotiation with Senate to save sanitation decrees – 05/18/2023 – Market

The Luiz Inácio Lula da Silva (PT) government plans to intensify the articulation with the Senate to maintain part of the changes in sanitation made by decree and which are at risk of being overturned by Congress.

Until last week, the Ministry of Cities and the Planalto Palace were studying editing an MP (provisional measure) or a bill for Congress to transform these excerpts from the decrees into law.

But the idea of ​​the MP generated noise with parliamentarians because, in this case, the changes being contested would be implemented immediately and maintained until the text is voted.

On the other hand, there is the understanding that a bill could generate legal uncertainty in the sector and paralyze investments until Congress concludes the analysis of the proposal.

Members of the Ministry of Cities and the Planalto Palace consider that the best way out is to try to negotiate with Congress – including returning to dialogue with the Chamber – the preservation of part of the decrees.

The idea is to ensure that the Senate does not approve the PDLs (Legislative Decree Projects) that overturn the changes sought by the Lula government or, alternatively, make changes in relation to what was approved by the Chamber.

The projects sent by the Chamber do not completely end with the decrees. They put an end to the loophole for state companies to provide services without bidding, the loosening of the rules for state companies to prove capacity and the possibility for companies to regularize precarious contracts.

This last point is of particular interest to the Chief of Staff, Rui Costa (PT), because Embasa (Empresa Baiana de Águas e Saneamento) has a precarious contract with Salvador for sewage services.

Rui Costa led the state until he became Lula’s minister and managed to place his successor in office, the current governor Jerônimo Rodrigues, who was Costa’s Secretary of Education.

Without the changes, Embasa would have to compete in a bid to maintain the service, which represents more than 40% of its revenues.

With the plan, the government would avoid a long discussion in Congress — which could paralyze investments in the sector due to legal uncertainty, in the opinion of government supporters.

The main criticism of parliamentarians in relation to Lula’s decrees is that the president used the text to define new rules, which should be approved by Congress. Therefore, the decrees would not only have regulated the sanitation sector — but rather interfered with the spirit of the law.

The government wants to discuss with Congress what would be the points that could still be maintained by decree.

The Lula government insists on the changes after the issue made it go through its first major defeat in the Chamber. Deputies approved the PDL, which aims to overturn the changes implemented by the Executive via decree.

The vote exposed a series of parliamentarians from grassroots parties who voted against Lula’s decrees. All 48 deputies from União Brasil who were present at the session voted against the government. In the MDB, almost all, 31 out of 32. In the PSD, 20 out of 27.

After Lula’s defeat, the president of the Federal Senate, Rodrigo Pacheco (PSD-MG), also stated that the “trend” is for senators to overturn the changes made by the federal government.

The decrees were put together by members of the government together with representatives of the sector: private and state companies. However, the texts were not presented to the top of Congress before Lula signed the acts.

Shortly after the publication of the decrees, the mayor, Arthur Lira (PP-AL), had already criticized mainly the loophole for state companies to provide services without bidding and also the easing of the rules for state companies that have not yet managed to prove technical capacity and finance to make investments.

Lira has defended the improvement of the sanitation law, that is, that deeper changes be discussed by bill.

The legal framework for sanitation, sanctioned in 2020, set 2033 as a goal for its universalization —that is, providing water for 99% of the population and sewage collection and treatment for 90%.