Shares of Sabesp, Brazilian water and waste management company owned by São Paulo state, rallied to a record high after Joao Doria, Sao Paulo State Governor, announced that privatizing Sabesp is still the “best option” if lawmakers in the country approve a bill that facilitates investment in sanitation.
Bloomberg reports that during an interview in London, Doria and Henrique Meirelles, his Finance Secretary, stated that they believe the sanitation bill will start moving in Congress in August, as well as the government’s plan to overhaul the tax system. Moreover, Doria considers the sale of Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) could raise nearly 20 billion reais (USD 5.3 billion).
Shares of the water utility jumped up to 6.5% in Sao Paulo trading.
Meirelles added that if the bill isn’t approved or if it is modified giving too much competitive advantage for state-controlled companies, they would consider capitalization. The government would then establish a holding company to acquire the state’s 51 per cent stake in the water utility and sell 49 per cent of that holding in the market.
Meirelles said: ““With the privatization plan we would sell control, but the capitalization would still be at a very sizable amount.”
Joao Doria also said in an interview with Bloomberg TV that the state seeks to privatize other businesses in the infrastructure sector.