The auction of concessions for the potable water and sewerage service in the Brazilian state of Rio de Janeiro on Friday raised almost 22.7 billion reais (about 4.1 billion dollars), more than double what was expected.
The result represents an important victory for President Jair Bolsonaro, present in the tender that was held after a political and judicial tug of war that lasted until Thursday.
“This is a moment that marks our history, our economy,” Bolsonaro said after the end of the operation on the Sao Paulo Stock Exchange. “This is a government focused on the market economy, on investor confidence,” he added.
The tender was divided into four blocks, launched for a total minimum price of 10.6 billion reais (1.9 billion dollars), with a forecast of investments of 30 billion (5.5 billion dollars) during the 35-year duration of the concession.
Only three blocks were the subject of a bid and the other (the lowest value) was left without a buyer. Even so, the amount obtained doubled expectations.
The works should ensure potable water services and the evacuation of sewage to almost 12 million people in 35 municipalities in the state of Rio, the second richest in Brazil.
The development bank of Brazil (BNDES) plans to finance up to 55% of the investments in these pharaonic projects, which could generate 45,000 direct and indirect jobs.
The winners will have to carry out decontamination works in the Guanabara Bay and infrastructure in favela areas, some of them dominated by drug gangs or vigilante militias.
Those who currently provide these services is the State Water and Sewerage Company (Cedae), criticized for the poor quality of the water that often comes out cloudy, smelly and earthy.
The idea of leaving water management in private hands meets resistance among unions and those who fear that privatization will lead to higher rates. A few dozen protesters protested against the concession at the gates of the Stock Exchange.
– In suspense until the end –
Only Brazilian groups participated in the tender and the big winner was Aegea, one of the leaders of the sector, which obtained two blocks that cover various sectors of the city of Rio (the state capital).
The third block was obtained by the Iguá group, which has 45% of its capital in the hands of the Canadian pension fund Pension Plan Investment Board.
The auction shows “confidence in Brazil,” congratulated the Minister of Economy, Paulo Guedes, whose plan for privatizations and concessions to reduce debt and public deficits was blocked due to the coronavirus pandemic.
“Brazil is going to resume growth, it is going to overcome these two waves” of health and economic crisis, he added, at a time when the pandemic is out of control and accumulates a balance of more than 400,000 deaths in the country.
The tender will have “a very positive impact on infrastructure in the basic sanitation sector (…) and a fundamental weight in the fiscal stabilization process of the country,” analyst Alex Agostini, from the Austin Rating consultancy, told AFP. .
The auction was in suspense until the last moment, because on Thursday the Legislative Assembly of Rio decided to suspend it, considering that it could not be carried out until the indebted state finished negotiating with the federal government a new fiscal recovery regime.
But a few hours later, the state governor, Claudio Castro, an ally of Bolsonaro, issued a decree to reverse the suspension, claiming that the matter concerned municipal councilors and not state legislators.
lg / jm-js / mr