Iguá Saneamento has secured a water services concession in Brazil’s Sergipe state with a winning bid of 4.5 billion reais (US$803 million), according to a press release by Brazilian Development Bank (BNDES).
In an auction held on Wednesday, Iguá outperformed competitors BRK Ambiental, Aegea Saneamento, and Pátria Investimentos. The concession, with a minimum fee set at 2 billion reais, is valued at an estimated 6.3 billion reais in total investment over its 35-year term.
Approximately 4.7 billion reais of the investment is planned for the first 10 years, with the project expected to serve 2.3 million people across 74 municipalities.
“The project to universalise water and sewage services in Sergipe is fully in line with the sector's new legal framework and preserves the role of Deso, which will continue to produce treated water in the municipalities where it already provided services, while bringing in the private sector to expand water distribution as well as sewage collection and treatment. This model, chosen by the state government, was well received by the market, which is evident in the four bids received,” commented the superintendent of the BNDES’ City Solutions Area, Luciene Machado, who represented the Bank at the auction.
“This concession was designed to guarantee the investments needed for dignified access to water and sewage for millions of Sergipe residents, including the inhabitants of hundreds of rural villages,” said Nelson Barbosa, director of Planning and Institutional Relations at the BNDES. According to him, in addition to the Sergipe project, the BNDES is currently working on structuring nine other concessions and PPPs in the sanitation sector, with the potential to benefit 36 million people and generate investments of R$99.5 billion.
While the state-owned company DESO will continue handling raw water collection and treatment, Iguá will manage supply and network expansion. The contract mandates that by 2031, 99% of urban areas in Sergipe must have water coverage, with rural areas reaching that level by 2033. Additionally, 90% of the population must have access to sewerage services by 2033.
Iguá Saneamento is primarily owned by the Canada Pension Plan (CPP) and Alberta Investment Management Corporation (Aimco), with a minority stake held by BNDES.
Brazil's private sector began entering the water and sanitation industry following the approval of a new regulatory framework in 2020, which requires local governments to ensure full water service coverage by 2033.
