Brazil's Sergipe state to receive 4 bids for US$1.1bn water concession

Four firms will participate in the upcoming auction for the water and sewerage concession offered by Brazil's Sergipe state, according to information obtained by BNamericas.

Water companies BRK Ambiental, Aegea Saneamento and Iguá Saneamento, along with investment firm Pátria Investimentos, were the ones submitting proposals and guarantees, said a person familiar with the process, speaking on condition of anonymity.

The 35-year contract involves investments of 6.3bn reais (US$1.13bn) and the auction will be held on September 4 at the São Paulo stock exchange, the state government said in a release.

Of the total, 4.7bn reais will be invested in the first 10 years, benefiting a population of 2.3mn in 74 municipalities.

The result of the analysis of the guarantees will be presented on September 3 and the auction's winner will be the company submitting the highest bid.

The concession was structured with the support of development bank BNDES.

It is a partial concession as state-owned DESO will continue to be responsible for collecting raw water and its treatment, and the new concessionaire will be responsible for distributing the water and expanding the system. 

The contract includes extending water coverage to 99% of Sergipe's urban areas by 2031, to 99% of rural communities by 2033, and ensuring sewerage services for 90% by 2033.

The sanitation sector, which was once dominated by state-owned players, has attracted several private sector companies in recent years following approval in mid-2020 of a new regulatory framework, requiring local governments to achieve full water and sewerage coverage by 2033.

BNDES is playing a key role in supporting state and municipal governments to structure their concession and PPP contracts.

Since the approval of the new regulation, BNDES has structured 12 concessions and PPPs that have been offered to the private sector, generating investments of around 90bn reais.