Murilo Melo Vale[1]


Through Federal Law No. 14.026/2020, a broad reform of the normative framework on water and sewage services in Brazil was carried out, with the aim of creating incentives for private investment in the sector. To this end, among the various measures, it was established that state sanitation companies must compete on an equal footing with any other interested company in order to provide water and sewage services to the 5,568 municipalities in the country, which hold the competence to define how the services will be exploited.

Betting on the increase of private investments, it should be noted that a challenging goal of universalization of sanitation services was established: by 12/31/2033, it is intended to ensure the service to 99% of the population with the distribution services of drinking water and 90% of the population with sewage collection and treatment. The confidence in private investment is particularly strong in the country, especially because the current government, which sought to emphasize public investment, could not reverse the consensus that broadening access to the sanitation market is the best path to achieve the universalization targets.

In this scenario, it is relevant to note that there are several opportunities for exclusive investment expansion in the area of sewage services. Many water distribution concessions are granted to state-owned companies without establishing goals for expanding sewage treatment services, which may present an opportunity for the exploration of new businesses. In addition, several municipalities explore sanitation services through their own structures – usually known as independents agencies of water and sewage – however, without the capacity for public investment to expand sewage systems.

Regarding the solutions found to comply with the duty of universalizing basic sanitation public services, there are some difficulties in defining criteria for reviewing exclusive concessions of water distribution to include obligations inherent to sanitary sewage services, or even, to create mechanisms to enable exclusive concessions for sewage treatment services alongside existing water distribution services.

The celebration of new contracts for exclusive concession sewage services has faced certain regulatory problems, such as: (i) inconveniences or impossibilities of increasing water tariffs to balance obligations related to the implementation of sewage treatment plants, (ii) problems related to the imposition of apportionment of existing water tariffs to amortize new obligations for sewage treatment infrastructure costs, (iii) problems related to exclusive billing for sewage services, given the ineffectiveness or impracticability of interrupting services only in this sector, among others.

One possible way to solve these problems is to encourage the renegotiation of exclusive concession contracts for water distribution – usually carried out by state-owned companies that hold cooperation agreements with municipalities –, to provide adjustments that could harmonize with another exclusive concessionaire for sanitary sewage services. Or, also, to create regulatory procedures which can impose obligations to access the infrastructure of another provider, according to the international doctrine of essential facilities[1], to oblige access to all necessary apparatus so that effective measures of autonomous collection by the provider of sanitary sewage services could be created.

Instead of common concessions, which pass along the entire risk of exclusive operation of sewage services, the public-private partnership model (in the form of "administrative concession") has had excellent returns and proves to be an excellent financially viable way to expand sewage systems through private investment, even in municipalities with financial difficulties.

In theory, there is a legal premise that public-private partnership (“PPP”) is always a subsidiary instrument compared to the common concession, given the need for a large financial commitment of the first model compared to the second one. However, models of project finances initiatives for construction and operation of sewage treatment infrastructures have been successful in not burdening municipalities, as variable remuneration is established depending on the actual amount of sewage treated, as well as guarantees of receipt through the collection of tariffs or fees charged to the beneficiaries of the services, directly by the municipal administrative machine, with the existing collection instruments.

In these cases, large investments to be directly funded by the city itself may not generate any weight to the municipal budget, in the face of new inflows of revenue from specific fees for sewage treatment services.

Encouraging these self-sustaining project finance models have shown fundamental for the development and exponential expansion of projects for structuring sanitary sewage infrastructure also the achievement of universalization goals. According to the report by “Instituto Trata Brasil”, with official data from 2019, approximately 100 million people in Brazil remain without access to sewage collection.

According to a report by "Instituto Trata Brasil", with official data from 2019, approximately 100 million people remain without access to sewage collection. This means that “49% of the sewage we generate, we are throwing about 5,300 Olympic swimming pools per day into the environment”.[2] According to the same report, the number of people without access to treated water is still large, but it has decreased to 35 million.[3] As we can see, the goals related to sanitary sewage services are much further from being obtained, which can be seen as a great market opportunity.

Certainly, the difference in the numbers for access to treated water and sewage involves issues of priority, often of a political nature. Receiving treated water – which is the minimum – is certainly one of the most visible health and sanitary demands. However, the increase only of treated water is innocuous without the corresponding treatment of the sewage generated, otherwise the own and desired consumption of drinking water representing a relevant socio-environmental contingency.

In conclusion, it can be said that sewage is a sector with great potential for growth and investments in Brazil.


[1] Murilo Melo Vale is a Doctor (PhD) and Master in Administrative Law. Postgraduate in Public Law. Vice-President of the Minas Gerais Association of Law and Economics. Professor of Administrative Law at different institutions. Attorney. Partner at Tavernard Advogados and Head of the Public Law area.

[1] Cf. VALE, Murilo Melo. Obrigações de Serviço Público no Setor Privado. Belo Horizonte: Editora Fórum, 2022, p. 296 et seq.

[2] MONZONI, Marlo; CARREIRA, Fernanda. O Metaverso do ESG. Website available at this link: https://saneamentobasico.com.br/wp-content/uploads/2022/12/Metaverso.pdf. Acesso em 07.12.2022.

[3] Op cit.