What Will the Sanitation Landscape Look Like in Brazil?

As it does every year, the Instituto Trata Brasil has released the 2024 Sanitation Ranking, reflecting the traditional analysis of the sanitation landscape in Brazil. The material provides important information and some new developments, but the results are well-known to those interested in the sector. It is evident that the lack of access to potable water impacts nearly 32 million people, with approximately 90 million Brazilians lacking access to sewage collection. The conclusion remains that Brazil still wastes a significant amount of water in its supply services, given the high percentage of losses, with a national average of 37.78% for 2022, according to data from the National Sanitation Information System (SNIS).

For readers aiming to better understand these figures, we recommend consulting the Trata Brasil material, as well as the annual publication by the National Association and Union of Private Concessionaires of Water and Sewage Services (Abcon Sindcon), which outlines the private sector’s participation in sanitation services. However, it is important to note that analyzing these metrics is just one facet of the Brazilian sanitation landscape. Other elements must be considered for a more comprehensive analysis, especially to understand the latest movements in this sector.

Focusing on water and sewage services, it is relevant to study the impacts that new delegation projects have generated, whether they are associated with privatizations, concessions, or Public-Private Partnerships (PPPs).

There is a lack of analysis regarding privatization models, as there are few examples in the sector—currently, only three formalized cases exist, with the privatization of the Companhia de Saneamento Básico do Estado de São Paulo (Sabesp) pending. The models range from the transfer of control of state companies, with their contracts disguised as concessions, to the sale of shares in the market (possibly with a reference shareholder), accompanied by regulatory changes that become more contractual than discretionary.

However, it is necessary to examine the different ways of organizing concessions for services, sometimes with full delegation of water and sewage services, but other times leading only to partial delegations. In both cases, risks are allocated differently from contract to contract, with disparate rules for rebalancing and varying situations of interdependence between operators and assets.

It is also important to evaluate PPPs as another form of delegation, predominantly linked to state sanitation companies that chose to continue their operations under the New Regulatory Framework. Here, the discussion includes aspects such as implementing guarantees, reducing regulatory asymmetry, and dividing responsibilities with public operators.

In addition to examining projects for service delegation, it is valuable to delve into the regulation and reference standards of the National Water and Basic Sanitation Agency (ANA), as well as governance debates in different regional arrangements organized to provide scale and viability for the services.

Summarizing the entire sanitation landscape provides a better understanding of what the market is debating and practicing in Brazil. Much has been achieved in recent years, but the sector still faces intricate challenges that require creativity and effort to identify and overcome. We invite everyone to reflect on the broader context of the sanitation landscape, with the necessary goal of clarifying its contours and working towards the universalization of its services.