Water Privatization in Brazil

Water privatization in Brazil has been initiated in 1996. In 2008 private companies provided 7 million Brazilians - 4% of the urban population - in 10 of the country’s 26 states with drinking water. The private sector holds 65 concession contracts in the states of São Paulo, Rio de Janeiro, Espírito Santo, Mato Grosso, Mato Grosso do Sul, Santa Catarina, Minas Gerais, Paraná, Pará and Amazonas. Private companies have committed to invest 4.5 billion reais (US$ 2.8 bn) in the sector. The bulk of Brazil’s population receives water and sanitation services from public municipal or state-level utilities (see Water supply and sanitation in Brazil).

Water privatization in Brazil has been relatively limited compared to other infrastructure sectors (power, transport, telecommunications). Compared to other Latin American countries, it has been more stable than in Argentina and Bolivia, but also less widespread than for example in Chile. As under all concession contracts, the infrastructure itself remains public, but is being operated by the private sector. Likewise, water resources themselves remain publicly owned. Most concession contracts have been awarded by municipalities. A lack of legal clarity as to the right of state governments to also award concession contracts has thwarted some efforts at water privatization, notably in the state of Rio de Janeiro.

Privatization in Brazil has taken place without having previously developed a comprehensive regulatory regime, as it was the case in Chile. The impact of water privatization on access, investment, service quality, water use, tariffs and efficiency has been assessed in a 2008 study with the support from various Brazilian stakeholders as part of a global multistakeholder dialogue on water and the private sector.