A consortium between Acciona and BRK and Pátria Investimentos were the winners of the Pernambuco sanitation auction, which took place this Thursday (18) in São Paulo.
The project divided the concession area in two. Acciona and BRK won the contract for the Pajeú block, which includes 151 municipalities. Pátria will be responsible for the Sertão bloc, which includes 24 cities. The contracts will last 35 years.
One of the largest projects in the sanitation sector in recent years, the Pernambuco concession plans investments of 19 billion reais to universalize services in 175 of the state’s 185 municipalities.
The auction criteria were hybrid: a greater reduction in customs duties and a higher subsidy value. In fact, the notice limited the price reduction to 5% on each lot.
Pátria, Aegea and Cymi Brasil participated in the conflict for the Sertão bloc. The minimum grant proposal was set at 87 million reais.
Pátria and Cymi offered a ceiling reduction on the price; Aegea offered 3%. As Pátria proposed a much higher subsidy value than Cymi (720 million reais versus 197 million reais), the investment fund was declared the winner without the dispute reaching the stage of open protest – when companies increase their offers. The offer represents a premium of 727% over the minimum value
This result marks the entry of Pátria Investimentos into the sanitation sector. In recent months, the fund has expanded its portfolio of road concessions.
In the Pajeú block there was no competition. Only the Acciona-BRK consortium presented a proposal offering a 5% reduction on the tariff plus a subsidy of R$3.5 billion (60% premium compared to the minimum of R$2.2 billion).
Acciona and BRK Ambiental did not participate in recent sector auctions. The interest in the project and the consortium between the two was considered a surprise in this project.
Today, BRK is responsible for a PPP (public-private partnership) for wastewater in Recife and the metropolitan region, a project that can generate regulatory and operational synergy with the broader concession.
The companies will be responsible for the distribution of water as well as the collection and treatment of wastewater in the municipalities covered; Compesa (public sanitation company) will continue to be responsible for the production and sale of treated water to the concessionaire.
According to the government of Pernambuco, the objective of the concession is to achieve universal access within the time frame determined by the legal framework, by achieving 99% water coverage and 90% sewerage network service by 2033.
The contract sets the goal of gradually reducing losses and provides mechanisms to combat one of the state’s main problems: intermittent water supply. Within 180 days of the start of the operation, the winners will have to develop a plan to combat intermittency, prioritizing municipalities with rationing and identifying immediate interventions.
The project was the subject of a legal challenge. A few days before the auction, Procompesa (association of employees of the Compesa management group) contacted the Court of Auditors of Pernambuco to request a precautionary measure to suspend the auction.
The document highlights inconsistencies in the concession notice and cites overestimations of sanitation service rates in several cities. According to the representation, the data distorts the economic reality of the project, which would create requests for rebalancing of the contract from the winning company immediately after the auction, since the investments necessary to universalize the service would be greater than expected.
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