BNDES supports the state of Alagoas in structuring a concession project for two more sanitation blocks

Feb 12, 2021

The Brazilian Development Bank (BNDES) will follow up on structuring concessions in basic sanitation in the state of Alagoas, which in this second phase may include up to 88 municipalities, aiming to improve and expand the services provided to about 2.2 million people. This is the second auction in the sanitation sector where BNDES aids the state government. In September 2020 took place the operation to grant the water and sewage management of the 13 cities that make up Grande Maceió – block A, with planned investments in infrastructure of R$ 2.6 billion, to benefit 1.5 million people from Alagoas.

In this project, the water and sewage concession is divided into two groups: blocks B and C. The first covers the backland regions and part of the state’s agreste, totaling 48 municipalities. Block C, in turn, encompasses another 40 municipalities in the eastern regions and also part of the agreste expanding the sanitation services to the state’s countryside should impact 60% of Alagoas’s population. As this is not a Metropolitan Region, the mayors of the municipalities covered will need to join the projects by executing an agreement with the state.

First auction – On September 30th, 2020, seven companies competed for water distribution and sewage collection services in Grande Maceió. It was the first auction after the new legal framework for sanitation came into force. BRK Ambiental consortium offered the largest concession grant (R$ 2.009 billion), with premium of 13,180% in relation to the minimum amount stipulated in the bid notice (R$ 15.125 million). By signing the agreement, the company undertook responsibility for investments of R$ 2.6 billion in infrastructure.

The concession in the metropolitan area of Maceió focuses on the universalization of water services in six years and on the access to sewage network for 90% of people by the sixteenth year of the agreement. The concessionaire will also have to meet several indicators of performance quality and efficiency in the provision of services, in addition to reducing water losses to a maximum of 25%. Before the concession, the waste rate was 59%. The Sanitation Company of Alagoas (Casal) will continue to lead water collection and treatment.

For the new blocks, BNDES will also build the model to define the performance, deadlines and investments goals needed for the universalization of water supply and sewage services in the region. As in the other agreements, BNDES will be aided by a technical consultancy consortium to prepare the concession model of the areas. The entire model will be widely discussed with society, via public hearing and consultation.

BNDES and Sanitation – Access to basic sanitation is vital for health, quality of life and, above all, for people’s dignity. Sanitation is thus one of BNDES’s strategic targets for Brazilian development. By the end of 2021, BNDES intends to structure projects to improve the provision of water and sewage services in at least nine Brazilian states. The planned investments will be around R$ 50 billion, with direct benefit to over 30 million Brazilians.

BNDES acts as a factory of projects and services to develop private solutions to public problems, structuring partnerships with the public sector, new investors and qualified operators.

Besides the auction in Maceió, in October took place the bid to implement the Public-Private Partnership (PPP) in Cariacica, state of Espírito Santo. Aegea Saneamento, in partnership with the Companhia Espírito-santense de Saneamento (CESAN), will be responsible for expanding, managing and operating the Cariacica sewage system, in addition to treating waste from neighborhoods in the municipality of Viana. In total, R$ 580 million will be invested in basic sanitation infrastructure over the 30-year agreement (R$ 180 million in the first five years).

About BNDES – Founded in 1952 and currently linked to the Ministry of Economy, BNDES is the main instrument of the Federal Government to promote long-term investments in the Brazilian economy. BNDES’s actions focus on the socioenvironmental and economic impact in Brazil. BNDES offers special conditions for micro-, small- and medium-sized enterprises, as well as social investment lines, directed at education and health, family agriculture, sanitation and urban transport. In crisis situations, BNDES acts in an anticyclical manner and assists in the formulation of solutions for the resumption of economic growth.