WASHINGTON, D.C., August 8 -- The International
Finance Corporation (IFC) has announced the signing of an agreement with
Companhia de Saneamento Básico do Estado de São Paulo (SABESP) for IFC
to act as financial advisor for the structuring and implementation of a
US$265 million project to substantially enhance SABESP's water delivery
SABESP provides water and sanitation services for most of the 34 million
inhabitants of the State and City of São Paulo. The project, known as "Juquitiba,"
will be implemented on a build-operate-transfer basis and is intended to
be the model for a series of further SABESP-sponsored privatizations of
major projects which will be required to meet São Paulo's rising water
demand and to improve service quality. It is envisioned that the project
will be implemented under the terms of Brazil's Concessions Law of 1995,
designed to encourage private sector funding of the country's great infrastructure
IFC will assist in organizing an international tender to select a qualified
group to undertake the Juquitiba Project under conditions designed to attract
long-term limited recourse financing and to assure SABESP of adequate water
quality and availability.
"The State of São Paulo's water supply deficit of about 280 million
cubic meters per year is expected to grow substantially if no new water
resources are tapped," said Philippe Liétard, Director of IFC's Corporate
Finance Services Department, which is responsible for the corporation's
transaction advisory activities in connection with major privatizations
and project financings. "The Juquitiba Project will bring an additional
141 million cubic meters of treated water into the SABESP system,"
"SABESP decided to hire IFC to act as its advisor in developing the
Juquitiba Project as a model because of IFC's unique experience in advising
and investing in project finance transactions in water and other infrastructure
sectors worldwide," said Mr. Atilio Mariano, SABESP's Project Coordinator.
The Juquitiba Project involves building a water intake, pumping station,
pipeline, and tunnel to transport 4.7 cubic meters per second of water,
24 kilometers from the Juquiá River to the Santa Rita stream, in which
it will flow a further 18 kilometers to the Guarapiranga Reservoir in southwestern
São Paulo. At the Guarapiranga Reservoir, the project developer will build
a water intake, pumping station, water treatment plant, treated water pumping
station, and pipelines to deliver 4.5 cubic meters per second of potable
water into SABESP's fresh water distribution system.
IFC is the private sector arm of the World Bank Group and is the largest
multilateral source of equity and loan financing, and financial advisory
services for private sector projects in developing countries.