IDB approves US$250 million for Brazilian water utility Sabesp
Resources will help company meet needs of São Paulo’s growing population and support expansion of wastewater treatment systems
Washington, United States of America – The Inter-American Development Bank 2008-04-30 approved US$250 million in financing for Sabesp, the water and wastewater company of the state of São Paulo, Brazil, to support its capital investment program.
The IDB will provide Sabesp an A loan of up to US$100 million from its ordinary capital and a syndicated B loan of up to US$150 million from commercial banks to help finance part of the utility’s 2007–2010 capital expenditure program to expand and improve its provision of water and wastewater services. The funds will also be used to refinance part of Sabesp’s debt, including a Eurobond maturing in June 2008.
Companhia de Saneamento Básico do Estado de São Paulo (Sabesp) is the largest water and wastewater company in the Americas, based on the number of customers and net revenues. It operates in 366 municipalities, including the city of São Paulo, providing services to approximately 26 million people.
The company has undertaken a US$3 billion capital expenditure program designed to meet growing demand for potable water, increase the percentage of households connected to its sewage system, increase sewage treatment, improve overall operating efficiency and reduce water losses.
Sabesp currently provides water services to 100 percent of the population in its concession area, 78 percent with sewage collection and 63 percent with wastewater treatment. The company aims to maintain and improve these levels going forward, with an emphasis on increasing wastewater treatment.
“Sabesp is a leader in water and wastewater thanks to its commitment to making quality services universally available,” said Susan Wermcrantz, Investment Officer in the Infrastructure Division in the IDB’s Structured and Corporate Financing Department. “Its capital expenditure program will enable it to meet the growing demand for water and wastewater services in the State of São Paulo,” she added.
São Paulo’s state government controls 50.3 percent of Sabesp’s shares, the rest of which are listed on Brazil’s Novo Mercado and the New York Stock Exchange (NYSE).
IDB President Moreno has described Sabesp as a model of successful public-private participation in the water and wastewater sector, praising its ability to extend high-quality services into low-income urban communities while earning solid returns for investors (see link at right).
The Sabesp loan will contribute to meeting the goals of the IDB’s Water and Sanitation Initiative, which aims to finance improved or expanded services in 100 cities and 3,000 rural communities, reduce pollution in 20 priority watersheds, and improve the efficiency and transparency of service providers throughout Latin America and the Caribbean by the year 2011.