Sale of Sabesp: imbroglio with SP City Hall does not evolve – 10/28/2023 – Panel

Legal representatives from São Paulo City Hall and Sabesp have so far been unable to reach a consensus regarding a billion-dollar dispute between the parties after several meetings.

The perception of those involved is that the issue should not be resolved through an amicable agreement. The resolution must be the responsibility of Justice.

In this scenario, the values ​​must be incorporated into the privatization process of Sabesp proposed by the Tarcísio de Freitas government (Republicanos-SP), which plans to conclude it in 2024. Therefore, without a resolution, the state management will have to find a way to contemplate the different scenarios for the outcome of the legal dispute in the privatization process without causing disinterest or uncertainty among those interested.

The topic received a prominent place in the term of commitment signed by Mayor Ricardo Nunes (MDB) and the governor in August, as shown by the Panel.

In the text, they promise to “make efforts” to resolve “legal disputes” and emphasize the city hall’s action that contests what it considers to be “double charges” that Sabesp makes to São Paulo residents on their water bills.

According to a contract signed in 2010 between the City of São Paulo, the state government and Sabesp, 7.5% of the gross revenue obtained in the capital by the company must be allocated to the Municipal Fund for Environmental Sanitation and Infrastructure (FMSAI), used for basic sanitation actions and infrastructure in the city.

In 2018, however, upon authorization from Arsesp (Public Services Regulatory Agency of the State of São Paulo), Sabesp decided to pass on the burden to the tariffs charged to the population. The company also wants the city hall to reimburse it for the approximately R$2.8 billion that was transferred to the municipal fund from 2010 to 2018.

In 2021, the city hall went to court to contest the transfer of the 7.5% to the consumer tariff, on the grounds that the charge had already been included in the tariff calculation since 2010, when the contract was signed.

The percentage was established, according to municipal management, based on economic studies carried out by Fipe (Fundação Instituto de Pesquisas Econômicas) and by Sabesp itself, and it would not be possible to claim an economic-financial imbalance in the contract in 2018.

In this way, São Paulo residents would be being charged double by Sabesp, according to the city hall.

“The service provider [Sabesp] is being doubly benefited by the calculation of the charge in tariff pricing. Consequently, users of the service in the city of São Paulo have been suffering serious losses since 2018, when the transfer of the FMSAI charge to the tariff began”, states the municipal administration in the action.

The city hall asks Sabesp to suspend the collection it has been charging the population for amounts relating to FMSAI since 2018, return the amounts charged during the period and pay compensation to injured consumers. The exact values ​​have not yet been calculated.

The process has been suspended since August 2021 for extrajudicial negotiations between city hall and government, in search of amicable solutions.

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