The Minas state government is seeking a gambit to launch business worth R$1.4 billion in 2026, an election year, when current deputy governor Mateus Simões (PSD) will compete to succeed Romeu Zema (Novo). The aim is to sell Copasa, a state-owned sanitation company, and use the resources for “infrastructure investments”, similar to the strategy adopted by Rio’s governor, Claudio Castro, with the Cedae concession in 2021.
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The Zima administration took the first step last week, approving a proposed amendment to the Constitution (PEC) that would allow the sale of Kubasa “for the purpose of paying state debts to the Union.” As a result, the privatization – which will be voted on in a separate project, which is still being processed in the Legislative Assembly – has been linked to the state of Minas’ accession to PROPAG, a program to refinance state debt.
Contrary to what was initially expected, Zima, in a letter sent to the National Treasury on the 6th – hours after the Assembly approved the Kubasa PEC project – communicated that resources from the sale of the SOE would not be transferred directly to the Union, but would be used for business in the state.
The government stated, in a note sent to Globo, that “the resources generated by the privatization (COPASA) will be used for infrastructure investments, in order to reduce interest on debt.”
The current debt of the state of Minas is about R$180 billion. The first step in the Minas Gerais state government’s proposal is to cut some R$36 billion, transferring the resources obtained from the sale of state assets to the federal government. The current administration, for example, plans to raise R$13 billion from the privatization of the state-owned gas company, Cemig, in addition to R$1.9 billion from the sale of real estate.
Since then, with the remaining debt stock approaching R$144 billion, the Minas state government has committed to investing 1% of this amount – that is, about R$1.4 billion – already in 2026, in “infrastructure measures for sanitation, housing, climate change adaptation, transportation or public security”, another criterion stipulated in the Propag. This investment is equivalent to the federal government agreeing to repay the debt within 30 years, without interest.
Zema’s allies and opponents agree that the strategy helps boost the state’s cash flow from the beginning of 2026, when Deputy Governor Mateus Simoes will inherit the government and run for re-election. Simões directly supervised the negotiations for Minas’ accession to Propag. The deputy governor estimates that about R$4 billion will be raised with Copasa.
Behind the scenes, the process is expected to be completed before mid-year. Although the privatization project has not yet been voted on in the Legislative Assembly, Copasa has already appointed a consulting firm, in May, which has been preparing privatization scenarios, including forecasts of tariff adjustments for users.
Zima’s opposition is in turn trying to stop the sale of the state-owned sanitation company. According to State Rep. Beatriz Cerqueira (PT), the Minas Gerais state government has not presented impact studies for the project being processed in the Assembly.
– Since the government is in a hurry, it opens the possibility of asking several subsequent questions. Why is there no need to study the privatization of Kobasa? The Federal Sanitation Framework Act criticized the presentation of these studies.
One of the Minas Gerais state government’s benchmarks for the pace of Copasa’s sales is the privatization of SABISP by the São Paulo government. The process was completed in July 2024, after São Paulo lawmakers gave the green light to the deal in December 2023.
Another similarity is the Cedae concession, in 2021, which generated about R$15 billion for the Rio government’s coffers. At the time, Governor Claudio Castro had just taken permanent possession of Guanabara Palace, after deposing his former ally Wilson Wetzel.
Castro leveraged Cedae’s resources to launch a series of actions across the state, which helped him boost his bid for re-election the following year. By the end of 2022, the Rio government has allocated R$7.7 billion in concession revenue. In business alone, there was R$2.5 billion.
Another relevant destination for Cedae’s resources is the Ceperj Foundation, which received R$128 million in 2022 alone. This month, the Supreme Electoral Court began prosecuting Castro in a lawsuit accusing the governor of financing the illegal recruitment of electoral telegrams by Seberg. The rapporteur, Minister Isabel Galeotti, voted to impeach Castro, but the analysis was halted by the review request.
Applying Cedae money to the business was only possible because of a loophole in the tax refund system, a federal law that predated Propag.
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