São Paulo's plans for privatizations, concessions and PPPs

São Paulo state plans to move forward with several privatizations, concessions and public-private partnerships in the coming months.

"We’re now in the middle of a public hearing process for the privatization of [water utility] Sabesp and we’re in talks with municipalities that contract Sabesp's services. I believe the privatization will take place in June" after the public-hearing phase of the process, says Rafael Benini, São Paulo state secretary for investment partnerships.

São Paulo owns 50.3% of Sabesp and wants to sell a controlling stake via a share offering. The other 49.7% is listed on the market, which means the majority of shares will end up in private hands and through a shareholder agreement the purchaser of the state's share will be the effective controller of the company.  

"We still don’t have the exact size of the share that will remain in the hands of the state after the share offering," adds Benini in an interview with BNamericas.

Sabesp is one of the world's biggest water firms, providing potable water to 28.7mn people and sewage services to 25.5mn. The state government projects that Sabesp will invest 260bn reais (US$52bn) through 2060. Of the total, 68bn reais will be invested by 2029 to achieve universal coverage in the 375 municipalities where Sabesp operates.

"In the future, Sabesp, being a privatized company, will likely look at contracts in other states, but this won’t happen in the short term. The investment obligations and projects that Sabesp has planned for the state by 2029 are so large that they will keep the company very focused on [São Paulo] state," says Benini.

Meanwhile, the state government plans to hold an auction to privatize metropolitan water and energy company EMAE in April.

"EMAE will release its financial results in March and will also hold during the month a general meeting with shareholders as part of the privatization process, and the auction is likely to take place on April 10," adds Benini.

HIGHWAYS 

São Paulo, Brazil’s wealthiest and most populous state, is also planning to hold an auction for a concession for the Litoral Paulista highway package on April 16. 

In addition, the state, together with the federal government, is preparing a tender for the Santos-Guarujá immersed road tunnel, along with the Nova Raposo, Rota Sorocabana and Paranapanema road lots.

"The Nova Raposo and Rota Sorocabana highway lots involve projected investments of at least 15.5bn reais," says Benini.

PASSENGER TRAINS 

The state government is preparing other contracts for passenger lines after concluding an auction last week for a PPP contract for the Intercidades passenger rail line, connecting São Paulo city with Campinas. 

It is still planning to offer this year concessions for CPTM's line Nos. 11, 12 and 13, and will structure other intercity rail projects including one between state capital São Paulo and Sorocaba.

"The public hearing phase for the train line concessions will take place in May and we intend to advance with auctions for those lines during this year," says Benini.

"Regarding the São Paulo-Sorocaba link, we’ll likely complete the study of the contract model this year and begin the public hearing phase at the beginning of next year. Estimated capex for this project is currently at least 9.5bn reais, but we’re still updating the figures."

According to Benini, in recent months, as part of the auction process for the Intercidades train, the government held a series of roadshows with international investors and logistics operators to present passenger rail projects. As a result, he expects greater competition in the upcoming auctions.

A consortium made up of Brazilian firm Comporte and China’s CRRC was the only bidder in the Intercidades auction held February 29, winning the PPP contract to build and operate the 101km line that requires investment of around 14.2bn reais.