Brazilian water regulator's staff shortage: 'The situation is dire, just like in the other agencies'

Brazilian water and sanitation regulator ANA is expected to continue working in the coming months on drafting new regulations for the sector. 

This sector has become one of the most attractive for investments in Brazil in recent years, particularly after the approval of the 2020 regulatory framework for sanitation, which aims to universalize services by 2033, expanding access to potable water and sewage treatment.

Updating the regulations is critical for standardizing rules, attracting investors, and enhancing legal certainty in the sector. These measures are intended to improve efficiency and service delivery, and encourage public-private partnerships, the number of which has grown significantly in recent years.

Additionally, ANA plays a vital role in monitoring the occurrence of extreme climate events. However, these efforts are taking place at a time when the regulator faces staff shortages, which could hinder its ability to meet its objectives effectively.

Veronica Sánchez da Cruz Rios, the head of ANA, talks with BNamericas about its plans and challenges ahead for the coming quarters.

BNamericas: What is ANA’s priority agenda for the next few months?

Rios: In the remaining weeks of 2024, we expect to publish two sector-specific frameworks related to urban drainage.

By the first half of December, we will have the agenda for all the frameworks planned for 2025 and 2026.

There is something curious – two or three years ago, we were being asked whether we would be able to create the necessary frameworks for the sector’s development. We were questioned about whether we had the team and technical capacity to handle the need for so many norms. Now, given our accelerated work on new regulations, sector agents have been asking us to ease up because we’ve been publishing many frameworks, and they’re not able to absorb them all.

Nonetheless, we’ve received quite positive feedback so far on the frameworks we’ve published, both in terms of technical aspects and their impacts, both on existing contracts and new ones.

The evaluation is very, very positive up to now, and the expectation is that next year we will publish at least 12 frameworks for the sector, covering both economic aspects, tariff structures and components. We’re finalizing the part on solid waste and urban drainage, which we’re just starting, and we’re also finishing water and sewage regulations.

In any case, so far we’ve had very positive feedback on the standards that have been published, both in terms of technical aspects and the impacts of this, both on existing contracts and new contracts.

BNamericas: What is your assessment of the current sanitation contracts? Are there any signals indicating the need for revisions?

Rios: The first concession contract was signed in December 2020, referring to the first contract under the new legal framework for sanitation. It was the Alagoas contract. Since then, there has been significant progress in the regulations through reference norms, which have meant that, with each new contract, these changes have been incorporated.

We’ve worked closely with [federal development bank] BNDES so that the modeling for new concessions that BNDES carries out already incorporates the frameworks we have. 

For example, the universalization regulation is  being incorporated into contracts developed by BNDES. The regulation for risk matrices and tariff structures should also be incorporated. So, this is an interesting movement.

One thing we are careful about, and it’s in all our frameworks, is that a new one does not alter existing contracts. So, current contracts are respected, and any new frameworks we define will apply to new contracts, those to be signed from that point forward.

BNamericas: The private sector is quite concerned about the impacts of the tax reform. Do you think this could be an imminent risk to the sector in relation to contracts?

Rios: It is an imminent risk because the contracts that were signed were obviously based on the economic modeling with the current rate. Depending on what is approved [regarding the tax reform] and sanctioned by the national congress, it will have direct implications on all contracts, necessarily leading to contract adjustments.

So, in terms of rates, timelines or investments, each agent will have to amend their contract if the tax reform indeed leads to increases that significantly affect the rates.

But obviously, this poses risks to universalization. The more taxes you’re paying, the less money there is for providing sanitation services, which are tied to universalization goals. So, the concern is very valid.

Sector associations are engaging with lawmakers. I hope this awareness is raised because the challenge is for Brazil as a whole. It is not to benefit company A, B or C. It is for the entire sector, and the implications of the absence of sanitation for public health, quality of life, environmental issues and investments are huge. It’s a contradiction to raise the tax rate on a sector that has historically faced an investment deficit, and only in recent years has it managed to, let’s say, reverse the trend and slightly improve the investment curve to increase the sector’s coverage.

In four years, if taxes increase significantly, potentially doubling the rate, it will have a very harsh impact on the sector.

For existing contracts, there is a suggestion that, eventually, these contracts could be amended to incorporate what a new norm establishes.

BNamericas: There are a lot of complaints regarding the shortage of personnel at regulatory agencies. What is the current workforce at ANA? What would be the necessary staffing to cover potential gaps?

Rios: ANA is the smallest of the 11 federal regulatory agencies. We currently have a staff of 272 people.

We were authorized to hold a competition to hire 40 more people. But to give you an idea, in recent years, 67 people have retired or left the agency. So, these 40 people we were authorized to hire will not even replace those who have left.

ANA today has fewer people than it had in 2000, when it was created. And this is with the challenge we face, not only to monitor all of Brazil’s rivers through the hydrometeorological network, but also to promote the management of water resources with all the states and the 229 federal basin committees we currently have.

In addition, we have to train the entire sector. We train 35,000 people annually in water resource management, dam safety and sanitation, all with just 272 workers.

When we look at international benchmarks, they say ANA is a huge agency, but I always point out that in inspection, I only have 20 people to oversee all the water uses in a country that has the most water in the world. It’s absurd what we have to accomplish.

To mitigate this, we’ve invested heavily in technology and in tools such as satellite monitoring for inspection, in partnerships with [space research agency] INPE and the federal police, to do remote inspections because we don’t have the staff to go out in the field and visit all the operations. In recent years, we’ve also been assigned responsibilities for dam safety and sanitation without any increase in our staff.

So, the situation is dire, just like in the other agencies. [Mining regulator] ANM is also in a very poor situation. At ANA, it’s no different from the other agencies, and the challenges are only growing while the number of staff decreases. The challenge is huge.

BNamericas: What is the ideal workforce size for ANA?

Rios: For what we do today, we recently concluded a study that we called ‘workforce sizing’. We would need at least 120 more people.

With 120 more people, we would be comfortable with what we do today. Is this optimal? I’m not sure. I believe we could do more, especially when it comes to water usage, considering the scenarios we face with climate change and the need to rationalize water use.

The main questions are: what does Brazil want from ANA? What does Brazil consider a priority when it comes to water resources?

BNamericas: What is the risk of having a regulatory agency like ANA weakened?

Rios: An immediate risk. The national hydrometeorological network today has 23,000 monitoring points across Brazil. Through subcontracted companies, we monitor, replace equipment, and collect data every 15 minutes on all the rivers in Brazil.

Without people to carry out this monitoring, generate data and conduct analysis, I can’t build a hydroelectric plant. I can’t plan an irrigation project. I can’t measure the level of a river for navigation. I can’t warn about a drought coming or a flood. I can’t provide information to the civil defense about rainfall or rainfall volumes that could impact a city and prompt an evacuation.

These things affect everyone’s life. All economic sectors, industry, agriculture, livestock, human water supply through basic sanitation – everything is affected by hydrological data.

Everything we do is based on data. Without data, we can’t do anything. The data we have is from 100 years ago, we have a historical series that dates back 100 years. This historical series allows us to observe changes, so we know how the Madeira river behaved 50 years ago. I have the curve for the Madeira river level at point X, in Porto Velho, for example, which shows how much it has increased or decreased.

Without the data, we can’t issue alerts about extreme climate events. So, it’s concerning.