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Sabesp privatization intensifies second round debate in SP


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The possibility of privatization of the state sanitation company Sabesp became the target of the campaign to the government of São Paulo and opposes the candidates of the Republicans, Tarcísio Freitas, and the PT, Fernando Haddad.

Although not included in his government plan, Tarcísio has been advocating at least studies on privatization. Haddad counters that privatization would raise water and sewage tariffs for state consumers.

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In an interview with Rádio Bandeirantes on Monday (24), Tarcísio returned to the topic, stating that he will carry out studies on the sale of the company — in his opinion, “the best way” to support investments in universal service and reduce tariffs.

And he cited a model in which the concessions for the provision of services by the company could be extended in a process of capitalization of the state company, a proposal similar to the privatization of Eletrobras.

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Haddad defends that Sabesp “is the greatest asset” of São Paulo and dedicated a program in his TV time to the theme. He compared tariffs from São Paulo and Rio de Janeiro, which privatized part of its state-owned sanitation company Cedae in 2021.

The consumer in Rio, in fact, pays more, but not because of the concession of services to the private sector: data from Snis (National Sanitation Information System) show that tariffs in Rio were already more expensive than those in São Paul in 2020.

In that year, consumers from Rio de Janeiro paid, on average, R$ 5.35 per cubic meter (the equivalent of one thousand liters) in water and sewage tariffs. In São Paulo, the average price was R$3.44 per cubic meter.

In the first year of operation of the concessions in Rio, 2022, the state regulatory agency gave a lower readjustment than that given by the São Paulo agency, 11.82% against 12.83%, respectively.

Haddad also mentioned the quality of services. In fact, five municipalities served by Sabesp are on the list of the 20 cities with the best water and sewage service in the country: Santos (1st), São Paulo (4th), Franca (5th), Suzano (14th) and Taubaté (17th).

The list is made up mostly of state-owned companies; Sanepar, from Paraná, has six other municipalities. In the area served by Cedae, on the other hand, the city with the best indicators is Rio de Janeiro, which appears in 44th position.

An entity that brings together the sector’s concessionaires, Abcon/Sindcon argues that the new operators that won the Cedae (State Water and Sewage Company) auctions began operating at the end of 2021.

The first auction was held in April 2021, with the concession of three of the four blocks offered. The fourth block was awarded in December. In all, the state government collected R$25 billion in bonuses for contracts with a guarantee of R$30 billion in investments.

“Investment in infrastructure has a slower maturation time”, says Percy Soares Neto, executive director of Abcon/Sindcon, noting that Cedae remains responsible for the supply of water, which impacts the final tariff.

Abcon argues that Snis data show that the average tariffs of private sanitation concessionaires in the country were below those practiced by state companies between 2019 and 2020.

In the last year, the private sector received an average of R$ 4.63 per cubic meter, while state companies received R$ 4.72. Municipal water and sewage companies, on the other hand, have rates well below: BRL 2.77 in 2020.

Sabesp is a company controlled by the government of São Paulo but with 49.7% of its shares traded on the stock exchange, both in São Paulo and in New York. It serves 375 municipalities and, in 2021, earned BRL 2.3 billion.

It was seen in the market as a potential competitor in the sanitation auctions held by states and municipalities after the approval of the new legal framework for the sector, but it participated in only one dispute under the new rules, without winning.

The company’s management sees growth opportunities using a loophole in the legal framework, which allows the creation of special purpose companies controlled by municipalities to take over the services.
In this way, it would become a minority but operational partner in municipal sanitation companies.

For Abcon, the future of sanitation concessions will be impacted by the 2022 election. sewage.

There are four others under study, including the privatization of the state-owned Corsan Corsan.

At the national level, the PT program talks about strengthening state action in the sector. The trend observed so far, says Soares Neto, is that states with governments more to the left tend to opt for PPPs (Public-Private Partnerships).

In fact, Haddad cited PPPs as an alternative to 100% state-owned or 100% private models in his TV show.

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