RIO DE JANEIRO (AP) — Rio de Janeiro state privatized its water and sewage utility on Friday, after years of broken promises to improve sewage treatment and clean up the state's polluted Guanabara Bay.
It was Brazil's biggest-ever privatization in the sewage sector, and the first to take place after a new regulatory framework for it took effect.
The utility Cedae attends to 64 municipalities in Rio state, of which 35 were included in the auction. The majority of the state-owned company's assets were divided into four water distribution and sewer service areas. Companies presented bids for the 35-year concessions of all but one: that of the eponymous capital’s west zone and six other municipalities.
Sanitation company Aegea won the concession for two of the four blocks, presenting bids worth a combined 15.4 billion reais ($2.8 billion). The company Igua took a third block with a bid of 7.3 billion reais.
A state official told reporters afterward that the fourth area will be offered again in a new auction.
Before failure to auction off the last block, Rio had forecast investment in works worth about 30 billion reais and 2.6 billion reais to clean up Guanabara Bay over the coming five years.
The winning bidders have the goal of collecting and treating 90% of sewage by 2033.
According to Trata Brasil Institute, an organization focused on water and sewage treatment research, only 65% of sewage in the city of Rio is properly treated, leaving 35% to be improperly discharged. Four of Brazil's 10 worst cities in basic sanitation are also in Rio state, surrounding Guanabara Bay.
Promises to improve sanitation around the bay have been made since the United Nations Conference on Environment and Development, also known as Earth Summit, in 1992. More recently, the Brazilian city pledged in its bid to host the 2016 Olympics that it would treat 80% of its wastewater before the games began, but again failed to deliver.
Cedae's privatization drew controversy, and some state lawmakers mobilized in an attempt to block it from taking place. But a judge scuppered their efforts with a decision on Friday morning just hours before the auction.
The utility will continue to exist in a far smaller form, collecting and treating water for sale to distributors.