STF validates the sanitation legal framework that opens the sector for privatizations

The STF (Supreme Federal Court) decided on Thursday (2) to validate the new legal framework for sanitation, which facilitates the implementation of privatizations in the sector.

The score was 7-3. Ministers Luiz Fux, Alexandre de Moraes, Luís Roberto Barroso, Carmen Lúcia, Dias Toffoli, Gilmar Mendes and Kassio Nunes Marques voted to maintain the legislation approved by Congress in 2020.

Ministers Edson Fachin, Ricardo Lewandowski and Rosa Weber, in turn, partially disagreed and defended the maintenance of the pre-law rule that allowed states and municipalities to sign so-called program contracts.

The instrument authorized city halls to contract water and sewage services from state-owned companies without the need for a bidding process.

As they were defeated, the court validated the rule provided for in the law that determines that municipalities can only contract this type of service through public bidding. With that, defenders of the proposal in Congress and also in the government claim that there will be an injection of money from the private sector in the sector that will allow the expansion of services.

Economy Minister Paulo Guedes, for example, has already stated that the new law could generate from R$ 600 billion to R$ 700 billion in investments.

In the Supreme Court, the vote of the rapporteur, Luiz Fux, prevailed. The minister criticized the data related to sanitation in the country. According to the SNIS (National Sanitation Information System), in 2019, 96.5 million people did not have their sewage collected at home — this represented 45.9% of the Brazilian population.

Furthermore, despite 54.1% of the country’s population being connected to a network, the effectively treated volume, of all the sewage generated, is still low: 49.1%.

Fux praised the idea of ​​vetoing the possibility of municipalities contracting the service of state-owned companies without holding a tender.

“The exclusion from the program contract represents an affectation proportional to the negotiating autonomy of the municipalities, in favor of the achievement of equally legitimate sectorial objectives. This prohibition occurs pari passu [em igual passo] to the legislative option for delegation under the concession model.”

Barroso followed the same line, cited the need to “overcome ideological dogmas” and said that to be “progressive” is to opt for the choice that allows for the universalization of the system.

“I think that private investment in basic sanitation should be a paradigm shift. Private investment with competition, because we need to face the culture of false capitalism in which there is market reserve and public financing for everything,” he said.

Fachin, however, disagreed and said that the new model violates the autonomy of federation entities. “It is not possible to impose concession contracts when the Constitution provides for other means. Privatization in itself guarantees the adequate provision of public services in advance,” stated the minister.

The text declared constitutional by the STF establishes, among other objectives, the universalization of sanitation, with sewage collection for 90% of the population, and the supply of drinking water to 99% of society by 2033.