Águas do Brasil wins Rio’s sanitation auction for R$2.2 billion

With a bid of R$2.2 billion, the Águas do Brasil Group won this Wednesday (29th) auction for the last block of sanitation concessions in Rio de Janeiro. The amount paid represented a premium of 90% compared to the minimum offer provided for in the notice, of R$ 1.16 billion.

With the auction, the government of Rio concludes the concession process for water and sewage services in the state, which already had three other blocks auctioned in April. In all, the winning companies pledged to pay R$24.9 billion in grants.

Called block 3, the block auctioned on Wednesday was even offered at the April auction, but there were no interested parties. It involves serving 2.7 million people in the west side of the capital and other 20 municipalities in the state and provides for investments of R$ 4.7 billion over the 35 years of the concession.

Grupo Águas do Brasil competed in the competition with Aegea Saneamento, which even submitted a bid for the block in the first auction but decided to withdraw it after winning two other blocks, including the largest one, which has a population of seven million people and investments estimated at R$16 billion.

For specialists, little interest in the first auction indicated doubts about operations in an area that today already has a PPP (public-private partnership) for the provision of the service. The west side of Rio is still an area with a strong presence of militias.

For this second attempt, the government of Rio managed to include another 14 municipalities in the package offered to the market. The winner of this Wednesday’s auction is the PPP operator, in partnership with BRK Ambiental.

The biggest winner of the first auction, Aegea paid R$ 15.4 billion for the right to provide the service to nearly 10 million people in the capital and interior. The other winner was Iguá Saneamento, which paid R$7.3 billion for an area of ​​1.2 million inhabitants.

The transfer to the private sector of areas that were served by Cedae (State Water and Sewage Company) was the largest process of sanitation concessions in the country, involving the service of 13.7 million people and investments of R$ 32 billion.

The first Cedae auction was attended by president Jair Bolsonaro (PL), who closed the event with the traditional hammer strike alongside ministers Paulo Guedes (Economy), Rogério Marinho (Regional Development) and his son, senator Flávio Bolsonaro ( Republicans-RJ).

“This is a moment that marks our history, our economy. A government focused on market freedom, on investor confidence and on the belief that Brazil can be different,” said the president.

The money raised in the first offer led Governor Cláudio Castro (PL) to launch a R$ 17 billion investment package, which ranges from infrastructure projects, such as the recovery of roads and a surface subway, to the construction of schools and hospitals.