Sao Paulo, Brazil, July 10, 2012—IFC,
a member of the World Bank Group, signed a loan agreement with AEGEA Saneamento,
one of Brazil’s leading private operators of water and sanitation services,
to expand its services in low-income regions such as North and Northeast
Brazil that lack sufficient sewerage coverage.
IFC will provide a $53 million local-currency
loan—equivalent to 100 million Brazilian reais—to AEGEA. The financing
will help the company nearly double its water supply and sewerage services,
benefiting a total of 2 million people by 2016. It will also help address
a serious challenge in Brazil, where less than half the population is served
by wastewater collection services and only 30 percent of sewage is treated.
The problem is worse in the country’s poorer regions. AEGEA’s expansion
will help improve public health, quality of life, and economic productivity
for nearly 1 million Brazilians.
“Investing in water and sanitation
service coverage has a positive impact on public health expenditures and
on the economy as a whole,” said Loy Pires, IFC’s Country Manager in
Brazil. “The World Health Organization estimates that every $1 invested
in water and sanitation infrastructure would provide an economic return
of more than $3. Improving access to piped water and sewerage also helps
low-income households overcome poverty by reducing expenditures for drinking
water and health services.”
AEGEA Saneamento has a recognized track
record in Brazil, having more than doubled sewerage collection and treatment
in the states of Mato Grosso do Sul and Rio de Janeiro. It is known for
improving service quality and efficiency. The company recently acquired
16 concessions in the state of Mato Grosso and has signed a public-private
partnership to provide sewage in Piracicaba, in the state of Sao Paulo,
where it is expected to reach 100 percent collection and treatment by 2013.
“Our strategy is to quickly increase
service coverage, improve service quality, and gain operational efficiencies
so the population immediately realizes the benefits of our presence,”
said Hamilton Amadeo, chairman of AEGEA. “Sewage collection and treatment
is still quite low throughout Brazil, and it is a more pronounced problem
in the poorer states in the North and Northeast of Brazil. Our company
is ready and willing to work with governments to tackle this problem. IFC’s
support will be key to implementing this strategy.”
IFC’s loan will also support the broader
development of Brazil’s growing private sector participation in the water
and sanitation sector, which now accounts for only 10 percent of operations.
By demonstrating the profitability of these services, IFC’s loan and AEGEA’s
growth will encourage private investment in water and sanitation services,
ushering in market-based solutions to a longstanding challenge in Brazil.
IFC, a member of the World Bank Group,
is the largest global development institution focused exclusively on the
private sector. We help developing countries achieve sustainable growth
by financing investment, providing advisory services to businesses and
governments, and mobilizing capital in the international financial markets.
In fiscal 2011, amid economic uncertainty across the globe, we helped our
clients create jobs, strengthen environmental performance, and contribute
to their local communities—all while driving our investments to an all-time
high of nearly $19 billion. For more information, visit www.ifc.org.
AEGEA is the sanitation holding company
of Equipav Group. AEGEA generated net revenues of 327 million Brazilian
reais in 2011, an increase of 20 percent compared to 2010. The performance
reflects the company's increased focus on the growing sanitation
sector. With over 50 years of experience, Equipav Group has a strong presence
in the infrastructure sector. Comprising mining, engineering, sanitation,
road, and sugarcane companies, Equipav Group has a workforce of more than
2,000 employees, and its subsidiaries have annual revenues of about 800
million Brazilian reais.