Oct 7, 2020

 The Brazilian Development Bank (BNDES) and Companhia Espírito-santense de Saneamento (Cesan) received seven proposals from consortia interested in the public-private partnership project for sewage services in the municipalities of Cariacica and Viana, in the metropolitan region of Vitória, Espírito Santo. The envelopes were delivered on Tuesday (6), and the auction will take place on October 20, at the B3 Stock Exchange.

The purpose of the concession is to provide universal access to the sewage network by the tenth year of the contract. A total of 423,000 inhabitants will benefit from the project. Currently, only 48.3% of the population has sewage collection. In addition to the goal of increasing coverage by 95% until 2030, the plan is to treat 100% of the collected sewage.

“This is the second auction in less than a month to receive seven proposals. It shows we are on the right track. Brazil needs sanitation and the private sector is betting on an investment that will not only bring profit, but will help to change the life of the Brazilian population," said Fábio Abrahão, managing director of Infrastructure, Concessions and PPPs.

According to Abrahão, BNDES’s structuring sanitation projects will bring new investments, create jobs, and improve health and education across the country. "The objective is to improve the life of the Brazilian citizen in the widest possible way."

The criterion for selecting the winning group will be the offer of a greater discount on the amount of the sewage services tariff established in the notice. The same discount will be applied at the fixed installment, to be paid monthly by Cesan to the winner of the auction for providing the service.

The winning consortium takes responsibility for the services of expansion, maintenance and operation of the sewage system and for the support services to Cesan’s commercial management in the city of Cariacica, also covering sewage treatment of neighborhoods from the city of Viana. For this, the winner must invest R$ 580 million in basic sanitation infrastructure over the 30 years of the contract, with R$ 180 million of this total to be invested in the first five years.

Unlike a concession, in which the company takes over the operation and is remunerated through the tariff payed by the client, in a public private partnership (PPP), the concessionaire operates the service and receives at least part of its remuneration from the government. In Cariacica’s PPP, for example, the client continues to pay the tariff to Cesan and Cesan will be responsible for paying the concessionaire.

“PPP is a bold model of cooperation, it is the union of the public and the private to leverage structuring works,” says the CEO of Cesan, Carlos Aurélio Linhalis (Cael). “The expansion of sanitation is a reality in Espírito Santo and, by signing this contract, we will take a big step towards universal access to sewage service in the Vitória Metropolitan Region. Sanitation is an economic, social and environmental asset, but it is, above all, health. It means to give people dignity.”

BNDES and Sanitation - The access to basic sanitation is vital for health, quality of life and, above all, it gives people dignity. For this reason, this theme is one of BNDES’ strategic objectives for Brazilian development. Currently, the Bank's portfolio already has projects to improve the provision of water and sewage services in at least nine Brazilian states, including Acre, Amapá, Ceará and Rio de Janeiro. The planned investments will be in the order of R$ 50 billion, with direct benefit to more than 30 million Brazilians.

The Cariacica administrative concession project is the second to be auctioned out of a series of projects in the sanitation sector. The first was the project for the concession of water supply and sewage services in the Metropolitan Region of Maceió. The auction took place on September 30, with BRK Ambiental as the winner among six other bidding consortia. The winning group offered R$ 2.009 billion, which represented a premium of 13.180% in relation to the minimum amount stipulated for granting the service (R$ 15.125 million). BNDES will act as a factory for projects and services, structuring partnerships with the public sector, new investors and qualified operators to develop private solutions to public problems.