SAO PAULO – Brazil yesterday raked in a larger-than-expected US$4 billion (RM16.38 billion) auctioning the operating rights to the Rio de Janeiro water and sewer system, a win for President Jair Bolsonaro and his privatisation agenda.
The far-right leader attended the auction here that garnered the sum – more than double the minimum price – and came after a political battle that nearly saw the concession sale cancelled.
Bolsonaro, who has struggled to implement the privatisation plans he campaigned on in 2018, called the auction “historic”.
“This is a government that believes in the free market, that believes in winning investors’ confidence.”
It is the biggest-ever water-treatment auction in Brazil.
“The result is in: confidence in Brazil,” said ultra-liberal Economy Minister Paulo Guedes.
“Brazil is going to return to growth. We are going to get through both waves,” he added, referring to the hit that Latin America’s biggest economy has taken from the Covid-19 pandemic.
Rio’s troubled public water company, Cedae, has faced criticism in recent years for the city’s sometimes cloudy, smelly and earthy-tasting water.
The auction divided the firm’s system up into four lots by region – one of which failed to sell.
In all, Cedae serves 13 million people, including the greater metropolitan area.
The winning bidders gain 35-year concessions to their portions of the system, which they will be tasked with overhauling and operating.
Aegea, a leader in the country’s water sector, won two of the blocs, with backing from a sovereign fund in Singapore.
The third went to consortium Igua, in which Canadian pension fund CPP Investments holds a 45% stake.
Under the programme, operators are due to invest another 30 billion reais (RM22.59 billion) over 35 years in the iconic beach city of 6.7 million people, Brazil’s second-largest city after Sao Paulo.
Projects are slated to include a massive clean-up of Rio’s Guanabara Bay and infrastructure for impoverished favelas.
State development bank BNDES has pledged to finance up to 55% of those investments.
Officials said the concessions are expected to directly or indirectly create 26,000 jobs in Rio. – AFP, May 1, 2021
