Brazil’s sanitation sector “remains fragmented”


Brazil’s new sanctions could “reduce opportunities” for private investment, a new report by S&P has said.

Inherently resilient cash flows have attracted large-scale concessions in the sector, with private companies now growing the market share to nearly 20% of people served.

“Despite this recent trend, recent decrees enacted by the government aim to foster the participation of state-owned companies and federal funding in the sector, which could reduce opportunities for private investments,” the report said.

The decree allows for state-owned companies to tender larger P3 projects, which can now be larger than the 25% of contract value or annual revenue, as was the case under the previous law.

The agency also said that it thinks that “the variety of regional, state, or local regulators, rather than a single national one, results in less transparency and increases the likelihood of political influence”.

Earlier this year, Fitch said it expects “high opportunities” for P3s as a result of the changes, although noted that this will be in “compensation for estimates of a smaller number of bids”.