Sabesp stamps passport for growth – 12/08/2023 – Market

The state of São Paulo took an important step towards universal access to water, sewage collection and treatment. The approval at Alesp of bill 1,501/2023 by 62 votes in favor was the first step in the privatization of Sabesp.

The state government owns 50.26% of the company’s shares and was authorized by the Legislative Assembly to renounce part of these shares, freeing the company from state ties. It allows you to accelerate and anticipate the universalization of sanitation services, broadly serving not only the formal city, but also the “informal city”, where thousands of “invisibles” reside.

Sabesp will invest R$10 billion more than currently planned in sanitation infrastructure to seek universalization, increasing from R$56 billion to R$66 billion. This investment will advance the universalization of sanitation in São Paulo to 2029.

For those who already have access to these services it may seem insignificant, but ask families who live with open sewage or constant interruption of the water supply how important it is to speed up this process.

For the common citizen, it doesn’t matter who is the majority shareholder of Sabesp, it matters that they have water in the tap. For the environment, it doesn’t matter whether the pen that signs an investment is public or private, what matters is that sewage is not dumped into rivers without treatment.

The privatization model has yet to be announced, but everything indicates that the government will sell around 30% of the shares it currently holds.

The change in control of the company will avoid major changes that interrupt important projects according to the political cycle, will allow Sabesp to be more dynamic in hiring and retaining talent and seek more innovation without depending on laws that restrict state-owned companies.

We need to base ourselves on examples that worked: according to data from the IBGE National Household Sample Survey, 90% of Brazilian households had internet in 2021. According to data from the National Sanitation Information System (Snis), also in 2021, only 64.1% of Brazilians were served by a sewage system.

The internet began to be commercially explored in Brazil in 1994, the problem of basic sanitation is much older than that. There is no secret to this disparity: telephony was privatized in the 1990s, with more investment and without state ties, Brazil connected almost its entire population to the global computer network, but, maintaining a mostly state-owned and inefficient system, the same country cannot connect all Brazilians to the sewage network.

It is important to highlight that the state gains more relevance in basic sanitation. Regulation gains an even more important role, in the case of Sabesp, Arsesp (Public Services Regulatory Agency of the State of São Paulo) will continue as an instrument for monitoring and guaranteeing the provision of sanitation services.

It will be up to the state to ensure that the regulatory agency is independent, transparent and with technical excellence. Furthermore, Ana (National Water and Basic Sanitation Agency) has the role of regulatory supervision, establishing general guidelines for sanitation services in accordance with the new sector framework (Law 14,026/2020).

Sabesp will be able to improve a successful model of partnerships with other private sector companies, such as the new Rio Pinheiros project or the environmental Aquapolo. Currently, the company is already characterized by pragmatism and the search for greater efficiency in management, and this should grow.

Basic sanitation is a guarantee of dignity, and today São Paulo society took an important step that could guarantee this to millions of people.

It is important to ensure transparent processes that grant the state special political rights, ensuring its influence in accelerating the universalization of services and expanding the social tariff for the poorest sections of the population.

With more capital and fewer constraints, Sabesp will be able to fulfill its vocation as a global environmental solutions company.