Partnership enables improvements in water supply and sewerage through several projects in many regions of the country
Carlos Brazil
The accelerated process of urbanization in Brazil, strengthened in the 1950’s, has posed huge challenges to public administrators. It is worth stressing that at the beginning of the past century, 64% Brazilians lived in the rural area, while 36% lived in cities. According to the IBGE 2010 Census, the proportion changed to 16% inhabitants in the rural area and 84% in the urbanized areas. .
It is from that accelerated change that some of the biggest problems have come up in the cities, which have had the need to increase significantly their infrastructures in order to meet the needs of those populations that go on growing and growing.
The segment of basic sanitation is one of those which are mostly demanded as to its offer of proper living and health conditions to people. However, what we can see is, generally speaking, the incapacity of the public authority to offer basic sanitation services to the population for decades. .
According to information published by the Brazilian Association of Private Operators of Public Services of Water and Sewerage (Abcon), 34 million Brazilians do not have access to the general water supply network; 85 million have no proper sewerage services; and 118 million do not have their sewer treated. And the more needy the populations, the worse the conditions of access to those service.
Private-public partnership
These figures show the difficulties faced by public administrators to meet the population’s need properly. So, the concession of water supply and sewerage services have been gaining strength, particularly through the adoption of private-public partnerships, the so-called PPPs.
“We can see several advantages in the concession of sanitation services to the private initiative. Historically, that area, as much as many others in the country, have not received investments as required. It is enough to check the level of assistance relatively good as to water supply, but sufferable related to sewerage”, states KPMG leading partner in the area of Cities in Brazil.
This year Abcon has launched a publication called ““Panorama da Participação Privada no Saneamento Brasil 2014”, which brings a picture of the changes caused by the presence of the private initiative in setting up infrastructures and in the management of sanitation services.
The companies linked to the association operate in 297 of the 5,570 municipalities in the country, benefitting 27 million Brazilians. Since the entity was created some 20 years ago, R$5.5 billion have been invested and more R$6.5 billion will be invested in the next five years exclusively in already-existing projects. It is worth stressing that the segment is growing and new partnerships are being made.
New projects
According to Abcon, there are important concessions being defined in the municipalities of Guarulhos, Santo André, Mauá and Sumaré (SP); Maceió (AL); and Penha (SC), among others. Concessions in Serra (ES) and Paraty (RJ) have also been signed and are to receive new investments.
“Bringing private partners to this arena is a correct decision by public administrators which should be stimulated. All in all, the Government is not in conditions to hand in everything necessary in the sanitation area. It lacks arms, qualified people, access to innovative technologies and mainly funds”, states Schramm. However, that expert ponders: “Not everything is flowers because eventually there may be problems with the companies that are not able to deliver satisfactory services”.
Need of R$15 billion yearly
As to the size of the challenge, it is important to take advantage of the National Plan of Basic Sanitation (Plansab) launched by the federal government at the end of last year to realize that until 2033 R$15 billion yearly investments will be required to offer sanitation services to all Brazilians.
Among the projects already implemented, Abcon highlights the PPP signed with Companhia Pernambucana de Saneamento (Compesa) in the outskirts of Recife, to increase the sewerage network. It is the biggest partnership signed in the country, which started in August 2013 and disposes a total of R$4.5 billion investments, out of which R$3.5 billion to be used by the private initiative, represented by operator Odebrecht Environmental.
In Cuiabá (MT) since 2012 Companhia de Águas do Brasil (CAB Environmental), which belongs to the Galvão group, manages the water supply and sanitary exhaustion systems of the capital city of Mato Grosso. In the 30-year concession the project will spend R$1,021 billion investments.
Since last year a partnership between construction companies Andrade Gutierrez and Camargo Corrêa, made as a PPP with Companhia de Saneamento Básico do Estado de São Paulo (Sabesp) is in charge of the concession of the Producing System São Lourenço, located among the municipalities of Barueri, Carapicuíba, Cotia, Itapevi, Jandira, Santana de Parnaíba and Vargem Grande Paulista. The concession of that system dedicated to water collection, storage and treatment, will last 15 years relying on R$2.21 billion investments.
Another large project is the PPP of Sistema Rio Manso (MG), whose contract was executed in December 2013 between private operator Odebrecht Environmental and Companhia de
Saneamento de Minas Gerais (Copasa), to operate and render maintenance to the Rio Manso system, in charge of 28% of the demand for treated water in the metropolitan region of Belo Horizonte. The contract will last 15 years and disposes R$693.7 million investments.
In Espírito Santo, highlight goes to the PPP made with Companhia Espírito Santense de Saneamento (Cesan) in Serra. The Serra Ambiental consortium (Sonel Engenharia, Construtora Aterpa and Mauá Participações Estruturadas) has won the tender for administrative concession for maintenance, increase and operation of the sanitation exhausting system of that municipality. It will administrate the system for 30 years and the contract disposes R$805 million investments.
The biggest need is sewer collection
For Abcon, the sewer collection segment is the main challenge for sanitation in the country once 85 million Brazilians do not have access to that service.
“Inasmuch as the National Plan of Basic Sanitation disposes that some R$15 billion yearly investments will be necessary to bring those services to all Brazilians, we not only have an opportunity, but we also need the private initiative to participate in order to reach that level of investment once the historical average of investments in sanitation during the last decade has been about R$7 billion, less than half of what is needed”, explains Paulo Roberto de Oliveira, chairm
an of the Board of Directors of Abcon.
Prices remunerate investments
When “Panorama da Participação Privada no Saneamento Brasil 2014” was published, the association highlighted that the prices performed by the operators linked to the private initiative were not compatible with those adopted by the state sanitation companies. “The private initiative also performs a social price under contract in conditions agreed with the local authority in several of its concessions”, says Abcon chairman.
It is worth stressing that the contracts with the private initiative, generally speaking, list the receipt of the price paid by users as its main source of return on investment. .
It is exactly that remunerating characteristic that is pointed out as one of the attractions to investments of the private initiative in that area, as assesses Charles Schramm: “Sanitation has a component that is self-sustainable. There are no high levels of default, which attracts and stimulates the private sector’s participation. It is simpler to structure guaranties for investors”.
Additionally, long-term contracts are signed, which ensure from 8% to 10% return of the capital invested per year, which is very positive according to that KPMG partner.
To finish, Paulo Roberto de Oliveira highlights the importance of this new scenario in the sanitation area. “We believe that a partnership with the private initiative is the best way to cause a management shock in the sanitation industry”, says he. “Those are relatively long-lasting projects which demand time and massive injection of economic resources in their initial phases. In addition to more agility in searching and guaranteeing those resources, the private segment has the whole technical and human competences to execute them”, states that chairman.
Fonte: Revista O Empreiteiro
