Brazil's govt says water investments need to hit US$100bn

Brazil needs to attract US$100 billion in investments in water and sewage projects in the coming years, according to the government.

"It is urgent and unpostponable to ensure that the entire Brazilian population, in any part of the national territory and regardless of their ability to pay, has full access to quality sanitation services," cities minister Jader Filho said in a statement. 

According to the official, of Brazil’s population of 200 million, approximately 30mn still do lack access to treated water and 90mn do not have sewage collection services. 

“Our goal in this area is to universalize access to potable water by 2033, ensuring that 99% of the population has access to this essential service,” he added.

The large investments needed come at a time when companies in the sector are showing concern about potential tax hikes.

"The tax reform framework approved recently by the lower house disregarded the importance of the sanitation sector, signaling an increase in tax rates. If on the one hand there is an expectation in the reform that civil construction projects, which include sanitation works, can benefit from some reimbursement of tax credits, on the other hand there is a clear sign that taxes will increase," Percy Soares Neto, founder of water and waste consultancy Ikigai, told BNamericas.

Water companies currently have to collect the 9.25% PIS and Cofins federal taxes but are exempt from paying state tax ICMS and municipal tax ISS. 

However, under the regulations for each sector of the tax reform now under evaluation by the senate, the segment is facing the risk of seeing taxes increase to 26.5%, which is the estimated level for value-added tax, or VAT, to be implemented through the reform.

Since 2020, when a new regulatory framework was introduced, the water sector has seen an influx of private investment in an area previously dominated by state companies. 

According to the current regulations, cities need to achieve complete water and sewage coverage by 2033.

In 2022, investment in the sector reached 22.5bn reais (currently US$4bn) compared with 18.3bn reais the previous year, according to the most recent figures compiled by water concessionaires’ association Abcon.

In 2023, the sector saw investments estimated at 26.8bn reais, an Abcon spokesperson told BNamericas.