BNDES - Brazilian Development Bank




The population of Porto Alegre will provide their opinion on the water and sanitation concession model developed by BNDES

Jun 12, 2021

 On Thursday the 17th, the city of Porto Alegre opens a public forum for the process of full concession of the water supply and sanitation services of the city. The project developed by the Brazilian Development Bank (BNDES) prioritizes investments in the sewage network expansion (collection and treatment), and improvements in the operational and commercial management of water supply systems.

The model expects R$ 2.17 billion in investments that will provide sewage treatment to 588,000 inhabitants. Currently, 28 out of every 100 residents of the city do not have sewage collection. In addition, some areas also suffer from problems of interruption in water supply.

The notice proposes goals for the companies that will manage the system. According to contractual rules, sewage collection and treatment rates should reach 96 % of the generated sewage within 10 years. To ensure the good provision of services to the population, the contract stipulates performance indicators (such as water and sewage service indexes, water quality and supply continuity), which will be determined by a regulatory agency. Failure to meet these targets may lead to fines, reduced revenue and, at the limit, loss of concession.

The concession contract proposed in the public forum expects R$ 1.237 billion in investments by the concessionaire in the first five years, to maintain water supply services and expand sewage collection and treatment networks that would be dumped into Lake Guaíba, contributing to its revitalization. In addition, the companies will have an obligation to invest R$ 58 million in 10 years exclusively in favelas and irregular areas.

The model designed by BNDES allows the maintenance of current tariffs, including the social tariff, destined to the lower-income population. In addition, it stipulates the concession payment, by the company, to the City Hall, as part of the collection.

During the public consultation period, civil society, government entities and potential investors may clarify doubts and propose contributions to the project. The bidding notice must be published in the second quarter of 2021, so that the auction can be held by the end of the year.

The services are currently part of the duties of the Municipal Department of Water and Sewage (DMAE), which will continue to be responsible for monitoring already contracted works and for the drainage services of the city.

Social Impact – According to the parameters of the Trata Brasil Institute, the value of the properties that will be integrated into the sewage collection network may increase in 48 % with the expansion of sanitation in Porto Alegre; in addition to the possibility of generating income from leisure activities in Lake Guaíba, due to the proper treatment of sewage. Basic sanitation is also vital to improve quality of life, with a great impact on people's health (including reducing school delay), besides contributing to environmental protection.

Service Until January 29th, clarify any doubts and contribute to the improvement of the project by accessing the website of the Municipal Office of Strategic Partnerships (http://www2.portoalegre.rs.gov.br/ppp/default.php?p_secao=1456), fill out the available form and send it to the e-mail:consultasaneamento@portoalegre.rs.gov.br. A virtual public hearing will be held in the second half of January 2021.

A bank of services Even with the countercyclical action of BNDES due to the crisis caused by the Covid-19 pandemic, BNDES maintains its structuring role of enabling good infrastructure projects. Four new privatization projects, formalized in the first quarter of 2020, raised the expectation of total investment in the Brazilian economy to R$ 188 billion (compared with R$ 176 billion at the end of 2019), distributed among the 57 initiatives of BNDES “project factory.” In the case of sanitation, the project is expected to benefit 25 million people and generate around R$ 52 billion in investments. This year, the Bank held the auctions for the concession of sanitation services in the metropolitan region of Maceió (AL) and PPP of sanitary sewage in Cariacica (ES). More information about these projects is available at https://hubdeprojetos.bndes.gov.br/.

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. Its actions are focused on the socio-environmental and economic impact in Brazil. BNDES offers special conditions for micro-, small- and medium-sized companies, in addition to social investment lines, aimed at education and health, family farming, basic 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.

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