Brazilian state launches notice for US$1.2bn water, sewerage concession

The government of Sergipe state published a notice for a concession contract to operate water and sanitation services in the northeastern state, which involves projected investments of 6.3bn reais (US$1.2bn).

The contract, structured with the support of state-run development bank BNDES, is scheduled to be offered to private sector players in a bidding process on Brazil's B3 stock exchange on September 4, BNDES said in a statement.

The project involves increasing water supply coverage to 99% of the urban areas in the state by 2031, 99% of rural communities by 2033, and ensuring sewerage coverage of 90% by 2033.

Total investments of 6.3bn reais are outlined over the 35-year term of contract, benefiting around 2.3mn people in 74 municipalities. The majority of these investments, or 4.7bn reais, are scheduled to be made in the first 10 years of the contract.

Various states and municipalities in Brazil have held bidding processes for concessions for water and sewerage services after a regulatory change made in 2020 requires local governments to achieve universal public water and sewerage coverage by 2033. If they fail to meet the targets, they run the risk of not receiving funds from the federal government.

The sector, previously dominated by state companies, has seen the proliferation of private sector operators, given the significant investments needed to meet the goals.

BNDES is playing a key role in structuring the concessions and PPP contracts for the sector. Since the new regulation was passed, BNDES has prepared 12 such contracts, involving total investments of 90bn reais and benefiting 27mn people.

The notice for the Sergipe water and sewerage contract can be seen here, in Portuguese.