For lawyer Fernando Vernalha, municipalities run the risk of being left out of the universalization of the service
Brazil needs to accelerate sanitation concessions to meet the target of serving 99% of the population with drinking water and 90% of the population with sewage collection and treatment by December 31, 2033, determined in the New Sanitation Legal Framework, sanctioned in 2020 by former president Jair Bolsonaro (PL). The analysis is by the partner and founder of the Vernalha Pereira office and infrastructure specialist, Fernando Vernalha, 53 years old.
In an interview with Power360, Vernalha said that in addition to structuring contracts more quickly to meet obligations, states and municipalities must be concerned with regionalizing these concessions. In the expert’s assessment, the public authorities need to build a balance between the largest and smallest markets to guarantee the universalization of the service where there is not as much market attractiveness.
“Without a regionalization rule, the poorest municipalities will be left out of universalization because the market only goes after where it is most advantageous”, declared Vernalha.
Vernalha declared that service concessions to the private sector are the only way to make the investments necessary for universal sanitation in Brazil viable. According to the lawyer, the country needs to reach an annual investment level of approximately R$45 billion to R$50 billion for the next 10 years.
The amounts needed to achieve the objectives of the New Sanitation Framework are more than double the resources invested in the sector in the last 3 years.
Vernalha stated that to meet the goals, the country needs:
- model concession contracts in a way that makes them attractive to foreign capital;
- improve agreements for service provision;
- strive to adjust industry regulatory policies;
- ensure legal predictability for the execution of investments.
“Foreign investors don’t come to participate in 1 or 2 projects, they target a cycle of projects. To engage the participation of foreigners, we need to offer an environment with legal predictability, long-term regulatory policies and institutional stability”said Vernalha.
Watch the full interview with Fernando Vernalha (27min30s):
