Brazil's water and sewage sector flush with investments

Investments in Brazil’s water and sewage sector have gained strong momentum in recent years, driven by regulatory changes and improved project structuring, and this trend is expected to accelerate in the coming years.

In 2023, investments in water and sewage projects in the country reached nearly 29bn reais (US$5bn), up from 13.6bn reais in 2020, according to data from the national system of information on basic sanitation (Sinisa), which is controlled by the cities ministry.

"It is a number that represents a significant advancement and already reflects the greater competition and increased private sector participation among the concessionaires that provide water and sewage services to the population across the country," Christianne Dias, head of the water and sewerage concessionaires' association, Abcon, told BNamericas.

The investment recorded in 2023 was an all-time high. The comparison with 2020 is particularly relevant, as that year marked a turning point for the sector.

In mid-2020, Brazil passed new regulations requiring municipalities to invest in water and sewage projects to ensure full coverage for the entire population by 2033. At the time, about half of Brazilians lacked adequate access to water and sewage networks. 

The reforms opened the sector to private investment through concession contracts, public-private partnerships (PPPs) and privatizations, breaking the dominance of state companies.

Water-related projects accounted for 18bn reais of the total investments in 2023. More than half of this amount was allocated to water distribution, while 3.9bn reais went toward water intake or treatment.

The sewerage sector received 10.9bn reais, with 4.9bn reais directed to treatment and 4.0bn reais to collection and transportation, according to Sinisa data.

"One of the novelties of Sinisa is this separation between water and sewerage, where previously the data was collected together. This allows us to have more precision and detail in the information. Brazil has been making progress in the universalization of basic sanitation. These data points will guide us in making the best decisions. The cities ministry has been working hard to improve sanitation information quality continuously, and Sinisa is a fundamental part of this effort," Leonardo Picciani, secretary of sanitation at the ministry, said in a statement.

Private sector involvement in sanitation has expanded significantly, now covering about 30% of municipalities, compared with just 5% in 2020 when the new legal framework was introduced. Abcon expects private participation to grow further in the coming years.

In 2024, 92.4bn reais in future investments were secured through 17 regional and municipal contract auctions. For 2025, Abcon estimates that at least 25 bidding processes will take place, benefiting 848 municipalities and generating approximately 69.3bn reais in additional investments.

Abcon emphasized that the majority of the 900bn reais required to achieve full coverage targets by 2033 will be invested in the coming years.

Beyond regulatory reforms, progress in water and sewerage projects has also been supported by development bank BNDES, which has been assisting local governments in structuring concession contracts and PPPs for private investment.

Sinisa data showed that, by the end of 2023, 83.1% of Brazil’s total population had access to water supply networks, while 59.7% were connected to sewage collection systems.