Despite the deliberations of the plenary session of the Rio State Board of Auditors (TCE-RJ), which annulled a court order that stopped the agreement between Cedae and Águas do Rio, the water and sewer tariffs for users served by the concessionaire will increase as of December 1, although the percentages will be lower than those expected to compensate the company for possible errors in the tender notice. Bills will rise by 9.75% for Plot 1 (southern area of the capital), and 9.96% for Plot 4 (central and northern Rio, and the municipalities of Baixada Fluminense, as well as Cachoeras de Macaco, Cantagallo, Cordero, Doas Paras and São Sebastião do Alto).
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The Rio de Janeiro State Energy and Basic Sanitation Regulatory Agency (Agenersa) reports that it has issued a precautionary decision allowing the amendment, even if there is not enough time to approve the agreement by the basic date of the contract with the company (December 1).
But prices can still change. According to Agenersa, the accounts provided by the franchisee are analyzed by the agency’s technical teams. The regulatory body adds that depending on the outcome of this study, the adjustment rates may decrease.
By a vote of four to three, the TCE-RJ advisors suspended last Wednesday (26) the effects of the injunction issued by José Gomez Graciosa that prevented the signing of the agreement between Cedae and Águas do Rio, pending the analysis carried out by the technical staff of the court. If the injunction had not been revoked, the increases would have been 10.97% for Block 1 and 15.89% for Block 4.
Cedae stated that it “awaits the deliberations and approval of the agreement to adopt the specific measures.” Aguas do Río says it was “informed of the decision of the TCE-RJ plenary session, which re-established the conciliation agreement signed between the State, Cedae and the concessionaire, mediated by Agenersa.” He adds, “The company is waiting for the regulatory authority’s approval of the agreement to publish the new tariffs.”
Under the agreement, to compensate for the losses, the concessionaire will receive rebates of at least R$900 million when purchasing water from Cedae over the next few years.
The origin of the dispute goes back to five years ago, when a Cedae lien notice was issued. Aguas do Rio says that of the 27 cities in which it operates, 21 showed a discrepancy between the sewer coverage rates set out in the notice and those set by the company after the auction was held in May 2021.
The signed contract stipulates that the granting authority will be held responsible if this difference is greater than 18.5%, which is what the concessionaire claims to have noticed. To win the auction for two of the four Cedae blocks, the company made a grant of R$15.4 billion to the state and city halls.
In a document dated September 29, Sedai attributed these discrepancies to the “self-declaration nature” of the National Sanitation Information System (Snis), under the Ministry of Cities, where “discrepancies or gaps” may have occurred in the information filled out by the state-owned company and city councils.
In turn, Aguas do Río claims that the technical visits it carried out before the auction did not allow “to evaluate the buried networks, which would require opening hundreds of thousands of manholes in detailed works, street by street, city by city, in an area covering ten million people.” The agent has now discovered alleged discrepancies in the diagnosis made after taking over the service. The concession contract stipulates a period of 24 months to conduct a detailed survey of water and sanitation coverage.
Aguas do Río says, for example, that in Magi, the city was expected to have 40% sewer network coverage, but technicians found that the municipality did not even have sewerage collection, a situation similar to what happened in Nilopolis. Differences were also observed in Belford Roxo (from 39% to 8%) and in Duque de Caxias (from 43% to 10%).
The lien notice – which included these coverage ratios – was prepared by BNDES, which claims to have been based on Snis data, “which was analyzed alongside data provided by Cedae itself”.
Last month, José Gomez Graciosa accepted a request from state representatives Luiz Paulo (PSD) and Jari Oliveira (PSB) and temporarily suspended the agreement. The consultant stressed that although Águas do Rio claims to have found wastewater treatment coverage to be lower than that anticipated in the tender notice, any questions about the contractual terms should have been asked during the competition process.