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Aegea wins US$1.5bn Piauí state sanitation concession

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Aegea wins US$1.5bn Piauí state sanitation concession

Brazilian sanitation firm Aegea Saneamento won the bidding process for a sanitation concession contract offered by Piauí state government on Wednesday.

The company was the sole bidder in the auction, which took place on São Paulo's B3 stock exchange, offering a fee of 1bn reais (US$175mn) to the government, which was the minimum price.

Under the 35-year contract, Aegea will assume operations and maintenance services for water supply and sewerage systems in 222 municipalities across the state, taking control of a 5,253km water network and 601km sewage network. 

The estimated investment for the term of the contract is 8.6bn reais.

The contract will expand the company's footprint in the state, as Aegea has held the concession contract to provide water services in state capital Teresina since 2017.

Aegea must implement works to guarantee that 99% of the population will be supplied with piped water by 2033 and 90% of the public with sewerage services by 2040.

Since 2021, Brazil has seen the proliferation of concession contracts and PPPs organized by state and municipal governments, thanks to new regulations.

The rules in force require that states and municipalities achieve full coverage of water and sewerage services by 2033, or they may be prevented from obtaining funds from the federal government.

However, as potable water and sewage coverage is very low in some regions of the country, such as the northern state of Piauí, the legislation provides more time for universal coverage indicators to be achieved, allowing suppliers until 2040 to do so.

Aegea, owned by the Equipav group (53%), Singapore sovereign wealth fund GIC (34%) and the holding company Itaúsa (13%), currently provides services via concessions or PPP contracts in 507 cities in 15 different states of Brazil. It serves 31mn people, according to the company.

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