A recently approved legal framework in Brazil has changed the landscape for investment in water and sanitation services in the country. The social impact on Brazilians is potentially of an enormous magnitude, as today 50 percent of the 213 million inhabitants do not have proper sanitation services and 35 million lack of access to drinking water.
Municipalities will be required to hire private water and sanitation companies, which was previously limited to state-owned companies and local financing. A long list of concessions and privatisation of state-owned companies is expected to unlock EUR 100 to EUR 130 billion in long-term investments. With his amendment in the law, opportunities for Dutch companies, most notably in a technology supplier role, open up.
Centralised regulation, nation-wide standards, and long-term investments expected
To guarantee the success of the new legal framework, independent state agencies are being set up to regulate the market. A key feature for this centralisation of regulatory matters, while being presumably independent from federal politics, is that the sector will answer to the same standards nationwide. The same quality of services will be required in underdeveloped small towns as in large and wealthy urban centres.
A few projects have already been auctioned such as the privatisation of Rio de Janeiro’s state sanitation company CEDAE. Other projects such as the privatisation of a local water utility and the concession of an area for a long period are listed throughout the whole country.
A needed boost for the Brazilian economy
The Brazilian economy has been severely affected by the Covid-19 pandemic and it is now in need of recovery. Brazil has received a lot of criticism during the pandemic, both internally as well as internationally, and new flows of foreign investment, expertise, knowledge and cooperation are most welcome in order to give the economy the boost needed to execute large infrastructural works. This includes foreseen projects in the water sector aiming at better services and quality with regards to sanitation.
The Netherlands Water Partnership (NWP) and the Consulate General of the Kingdom of the Netherlands in São Paulo hosted a webinar on 22 June 2021 to highlight the perspectives of the various stakeholders in the Brazilian market, including the Brazilian Government, water utilities and financial institutions. What does the new regulation really mean and what are the roles for international players in this new landscape? The session aimed at finding answers to these questions.