China´s Gezhouba and CRCC Eyeing Brazil Water Sector

 

The opening of Brazil´s water sector has attracted the interest of China´s Gezhouba group and China Railway Construction Corporation (CRCC), among other Brazilian and European competitors.

 

In June, the Brazilian Congress approved the new regulatory framework for water and sanitation, ending automatic renewals of the current concessions and defining mandatory efficiency and quality benchmarks, as well as price policies.

 

The opening to the private sector has the broad goal of extending water and sewage treatment services to the whole population by 2033, adding to the network 100 million people, that today have no access.

 

The law still depends on the approval by the President, Jair Bolsonaro, and, later, on the process of renewal of the concessions by the municipalities.

 

According to the Brazilian Association of Private Concessionaires for Public Water and Sewage Services (Abcon),  750 billion brazilian reais (USD 141 billion) in investments will be needed in the next 10 years.

 

The current large state  sanitation companies in the country, like Sabesp, Copasa and Sanepar, are expected to gain space, expanding in their current markets, most likely with new partners.

 

Groups interested in investing in the sanitation sector can participate in the privatization of these large companies and use these companies as a platform for consolidating the sector, moving forward to dispute new areas of concessions, like what happened to the energy and telecom sectors, after their opening in the 1990s.

 

Águas Brasil, Aegea and BRK Ambiental  and other smaller private companies are also expected to expand, with the support of financial partners, such as investment funds, forming consortia to compete for new concessions.

 

According to the Brazilian press, major infrastructure groups are also looking to expand to the water sector, namely Equatorial, that operates in the distribution of energy in the states of Alagoas, Maranhão, Pará and Piauí;  Cosan, active in fuel distribution business, and CCR, with an extensive roads and airports operations.

 

From abroad, the process is being followed by Gezhouba group and China Railway Construction Corporation, UOL reports. Spain´s Acciona and France´s Lyonnaise des Eaux are also said to be preparing bids.

Photo: São Paulo, Brazil

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