Study Suggests Privatizing Sabesp May Not Benefit The Population
The privatization of Sabesp will be carried out through a share offering in a model similar to that used in the privatization of Eletrobras, announced this week the governor of São Paulo, Tarcísio de Freitas. The model, called follow on , provides for the dilution of shares held by the state government, which today holds a 50.3% stake in Sabesp. The government will relinquish control of the company and allow investors to have a greater stake in the business, acting in a long-term direction. In a statement to the State Government Portal, Tarcísio de Freitas said that privatization will make it possible to anticipate the universalization of the sanitation service from 2033 to 2029 and will lead to a reduction in the tariff applied today.
Problems
One of the justifications presented by the governor for privatization is that it could lead to an anticipation of the universalization targets. Pedro Luiz Côrtes, professor at the School of Communications and Arts (ECA) and the Institute of Energy and Environment (IEE) at USP explains what these goals are: “These goals are one of the fruits of the Legal Framework for Basic Sanitation , which determines that the population of all of Brazil has access to treated water and sewage collection by 2033 and, according to the governor, with the privatization of Sabesp it would be possible to anticipate these goals to 2029. However, there are no studies that substantiate these statements”, he argues.
Another obstacle is the privatization model, which has not yet been fully defined by the State. “While it was outlined as a follow-on , it has not yet been finalized. For example, it is not known what the maximum government participation will be. They say they will follow the Eletrobras model, where each shareholder cannot have a vote greater than the equivalent of 10% of the shares and the government has the so-called golden share , which is a possibility of vetoing certain decisions that the council may take if he judges that this harms national interests”, explains Côrtes.
The professor also argues that it is not possible to assess how much the government can collect from this, since the stock price will be defined by the Stock Exchange itself. “A number is placed without there being a study that defends it and without there being an outline of very important issues related to this dilution of shares”, he adds.
tariff policy
The promise of tariff reduction is also inconsistent, since the one who decides the tariff values is the Regulatory Agency for Public Services of the State of São Paulo (Arsesp). The agency has administrative and budgetary autonomy and regulates various services, such as the distribution of piped gas, as well as defining prices for sanitation services. Arsesp negotiates the tariff amount, therefore, with the service provider.
“In a large part of the state, municipalities are organizing themselves into blocks to contract sanitation services, which may be contracted with Sabesp or other service providers based on the sanitation regulatory framework. Municipalities can hire Arsesp to carry out this intermediation with the sanitation service provider, as they can decide on their own. The state government cannot guarantee that this will lead to a tariff reduction, because it does not act directly in the reduction of the tariff policy”, clarifies Côrtes.
The government also claims that there will be a capital injection, but privatization would not be necessary for this to happen. “It [the government] can increase the supply of shares, but it retains a portion of these shares for itself while maintaining control, and it is clear that it will have to participate in this capitalization, but it could raise funds in the market that way.” And he concludes: “At the end of the day, the population can be called upon to pay a bill for which it was not oriented, a bill that it would not need to pay”.