Two years after the approval of the new legal framework for sanitation and after the most sensitive period of the pandemic, the market is starting to feel the reflection in the unlocking of new PPPs (public-private partnerships) involving water, sewage and solid waste.
According to an exclusive survey requested by the Sheet to the Radar PPP consultancy, for this year, there are 57 PPPs between the stages of public consultation initiated and bidding closed, which would make 2022 the year with the highest number of contracts signed in the historical series, which began in 2016.
These 57 projects are at an advanced stage and are more likely to be signed this year. If only 18 of these 57 become contracts this year, the historic record will already be reached, when adding the 12 contracts already started in 2022.
Although the reflexes of the new legal framework for sanitation may not be fully internalized by public entities and the market, it is a fact that there is an expansion of initiatives in water, sewage and solid waste, evaluates Frederico Ribeiro, partner at Radar PPP consultancy.
Of the 423 new initiatives captured by Radar de Projetos by the end of June this year, 70 are related to water supply and sewage treatment and 70 are related to solid waste, that is, a third of everything that was launched, says the consultant.
“Currently, there are more than 140 projects in these segments being structured by the public administration, of all federative levels, in addition to almost 60 initiatives being structured with the help of the private sector, through the PMI [Procedimento de Manifestação de Interesse].”
When considering the 40 contracts signed in the last two years, since the approval of the sanitation framework, 39.2 million people living in these municipalities should benefit.
“This population is receiving improvements in water, sewage or solid waste services. In water and sewage, the state project in Amapá, structured by BNDES, is worthy of mention. [Banco Nacional de Desenvolvimento Econômico e Social] and which covered all 16 municipalities in the state, and the project for the state of Alagoas, four lots”, says Ribeiro.
The record expected for 2022 is due to the recognition of the stability of the new regulatory framework and the structuring of federated entities for this new reality of universalization of basic sanitation, says Igor Luna, government relations partner at Almeida Advogados.
“One of the main aspects to be considered for the attractiveness of the market is the establishment of criteria and rules to increase the transparency, efficiency and effectiveness of the provision of public services, which generates an environment of greater competitiveness for the sector.”
Despite the expansion of coverage, problems persist, such as inequality of access, which mainly affects more vulnerable populations, such as rural ones, and bottlenecks in the supply of inputs.
For the general coordinator of Ondas (National Observatory of the Rights to Water and Sanitation), Renata Furigo, the main objective of the law is the privatization of water and sewage services, not the universalization of services.
“This logic of sanitation as a business will not bring the results they are promising,” he says.
“Informal settlements —favelas, irregular and clandestine subdivisions, occupations, etc.—have complex physical characteristics, which make the implementation of networks more expensive and make it difficult to operate the systems. The rural population, on the other hand, was forgotten in this law.”
When the law was enacted, in 2020, only 6% of cities were served by the private sector. State-owned companies were responsible for services in 94% of the municipalities.
According to a ranking by Instituto Trata Brasil, access to sanitation, in addition to being precarious, is unequal throughout the country. The national average for sewage collection is 55%, compared to 75.7% in the 100 largest municipalities.
In the case of sewage treatment, the country average is 51% (and 64% in the 100 largest municipalities). In cities like Porto Velho (RO) and Macapá (AP), the population’s access to treated water is below 38%.
recent report from Sheet had already pointed out, based on projections by Abcon/Sindcon, that the water and sewage concessions granted after the approval of the new framework have investments totaling R$ 46.7 billion. Despite this, the segment still needs to overcome problems, such as rising costs and bottlenecks in the supply of inputs.
A survey by Cbic (Brazilian Chamber of the Construction Industry), with about 200 contractors, pointed out that the increase in inputs has caused a financial impact and a drop in the pace of execution of works: 41.5% of companies said they had losses in contracts.
According to experts, some points of the framework also need to be improved, such as regionalization.
Legislative assemblies across the country have advanced in recent months in approving the organization of municipal groupings into regions to facilitate new contracts. However, it is still not clear how the management of these regional blocks will take place in the different states of Brazil and how the projects will be modeled, says the partner at Radar PPP.
“This law also prevents the municipality from entering into program contracts with the state company, and the forms of privatization are harmful to society. says Furigo.
In addition, the government also needs to provide the ANA (National Water and Sanitation Agency) with qualified employees to issue new regulations for the sector.
One of the promises that still needs to be shown to be viable is the introduction of new modalities of resource contributions, which help to unburden the budgets of cities and states.
In this sense, a move made by the financial market itself is the financing of sanitation companies through incentivized debentures (securities issued to attract investments), which are tax-exempt, making it a good attraction for investors, Luna recalls.
Roberto Nucci, specialist in Administrative Law at PUC-SP, adds the need for a national project to recover the economy, as a starting point for advancing universal access to basic sanitation. “The role of a strategic State, promoting infrastructure works, including in the area of ​​sanitation, can generate wealth and jobs. We must value the experience of state and municipal companies in this area.”
Investments are directly related to prevention in the health area, says expert
In solid waste, Ribeiro, from Radar PPP, cites the examples of Campos do Jordão (SP) and Guarantã do Norte (MT), which also achieved the signing of a contract after modeling by PMI.
There are also examples of municipalities still in the structuring stage, such as Erechim (RS), with a water and sewage project in the bidding process, Porto Velho (RO), with a water and sewage project in public consultation, and Foz do Iguaçu (PR), with one of solid waste in bidding.
Investments in sanitation have a direct connection with prevention in the health area, since it means saving resources to be allocated in this area, in the fight against diseases and endemic diseases, and in environmental preservation, recalls Nucci.
“The concession contracts celebrated so far are the result of structured projects, mainly within the scope of BNDES”, he says. “But with the milestone, a window of opportunity was opened for the private sector and investment funds, including international ones.”
The main point of the new law is the end of the “program contract”. “Now, state-owned companies must submit to the bidding process in the same way as private companies, increasing competition and return to the population”, says Daniel Gabrilli de Godoy, partner at Orizzo Marques Advogados.
Government estimates indicate that the new framework should inject between R$500 billion and R$700 billion in the sector over the next ten years.
Seen as one of the priorities of Minister Paulo Guedes’ team (Economy), the legal framework for sanitation expanded the possibilities for private companies to provide services in the sector.
The project seeks to universalize basic sanitation by 2033, with 99% coverage for the supply of drinking water and 90% for sewage collection and treatment.
Deadlines can be extended until 2040, provided that justifications are provided for not achieving them.
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