Sanitation: specialists expect more concessions – 01/31/2023 – Market

The new sanitation framework should not suffer setbacks, despite the changes made by the federal government through a provisional measure, which still needs to be approved by Congress in order not to lose its validity.

This is the assessment of André Pires de Oliveira Dias, director of Aegea Saneamento, and Gesner Oliveira, partner at GO Associados and former president of Sabesp. They participated in the Latin America Investment Conference event, promoted by Credit Suisse.

At the beginning of the year, the government signed the transfer of ANA (National Water Agency) to the Ministry of the Environment and created the National Secretariat for Environmental Sanitation in the Ministry of Cities, to define the rules for operating this market.

There were also changes in legislation that could make concessions and privatizations in the sector more difficult.

Gesner said the measure was poorly received by the industry, as changes to the ANA could weaken the regulatory role of an independent agency, in a country where there are more than 80 subnational agencies. However, he said he believes the initiative will not go ahead.

“The government itself probably won’t go through with it. Some members of the government have said there has been a mistake. The obvious reading is that there is a disagreement. [A mudança] does not seem to be a preponderant position. I don’t believe in structural change in the new framework”, says the former president of Sabesp.

The director of Aegea makes a similar assessment. “We are at the beginning of a journey. We still have 50% of the population without access to sewage collection and treatment. I don’t see any type of initiative to significantly change what was achieved with the sanitation milestone”, stated Dias.

Gesner also stated that 2023 should be marked by a certain pause in projects linked to the states, due to changes in these governments, but that he sees strong demand from municipalities this year.

The director of Aegea believes that the next four years will be marked by a large number of projects.

When evaluating the results of several concessions managed by the company, the director of Aegea said that they were better than expected in several aspects.

He highlighted, for example, the administration of the Rio de Janeiro blocks assumed in 2021. According to Dias, for the first time in 40 years, Botafogo beach is free for bathing, and the Rodrigo de Freitas lagoon no longer receives sewage.

“The results have been much better than expected, from the point of view of the number of connections, revenues and resultant social impact.”

Gesner stated that there was a jump in investments in the sector with the new framework, but that new leaps are needed in the coming years so that it is possible to recover the delay of several decades and reach the goal of universalization of these services.

For this, says the Aegea executive, public and private investment, both from Brazil and from international agents, will be necessary.

“Brazil, given its GDP per capita and other characteristics, should have much more sanitation. Brazil is outside the curve, which is a tragedy, with impacts on health and the environment. We are outside the curve due to historical negligence and a misunderstanding that this is a great socio-environmental program,” said Gesner.