Bolsonaro approves bill privatizing water, but vetoes article defended by governors.

247 - Jair Bolsonaro signed into law, this Wednesday, the 15th, the Bill 4162/19, which provides for the privatization of basic sanitation....and therefore of water and sewage in the country, in an event held via videoconference. He, however, vetoed three articles of the text approved by Congress. One of them, article 16, stipulated that state-owned companies renew current and expired contracts for another 30 years, a demand of some governors and mayors who want the current contracts to have a longer lifespan.

The article was included primarily to garner support from the Northeast caucus and was based on an agreement with the Speaker of the House of Representatives, Rodrigo Maia (DEM).

The article states that "existing program contracts and de facto situations of provision of basic sanitation public services by a public company or mixed-economy company, considered as those in which such provision occurs without the signing, at any time, of a program contract, or whose validity has expired, may be recognized as program contracts and formalized or renewed by agreement between the parties, until March 31, 2022."

The veto was detailed by the General Secretariat of the Presidency, which justified it by stating that "by allowing the recognition of de facto situations and the renewal, for another 30 years, of these currently informal arrangements and current program contracts, they unduly prolong the current situation."

Furthermore, the department reports that "the provisions were vetoed because they are out of step with the objectives of the new legal framework for basic sanitation, which guides the signing of concession contracts through prior bidding."

With the veto, local governments will be forced to hold tenders to replace these contracts. In this way, Bolsonaro has alienated an important sector of the Brazilian public power, mainly governors, mayors and deputies from the Northeast.

Congress, however, still has the power to overturn or uphold Bolsonaro's vetoes. Congressman Geninho Zuliani, who was the rapporteur for the bill in the Chamber of Deputies, said that Article 16 "is a controversial topic that has already been extensively discussed in Congress" and, therefore, "will certainly face resistance."

Other vetoes

Bolsonaro also vetoed paragraphs 6 and 7 of article 14, removing the provision that the government could take over sanitation services from public companies or mixed-economy companies that undergo shareholding alienation. The approved text stipulated that the government could assume the activity upon payment of compensation.

The government justified this by stating that, “by creating a new rule for compensation for unamortized investments of sanitation service providers, they generate legal uncertainty due to a discrepancy with what is already foreseen in Law No. 8987/95 (Concessions Law). Furthermore, since it is not possible in practice to distinguish the revenue from tariffs directed to a specific asset, the payment of compensation would be unfeasible.”

Another veto was of article 20, which removed the category "solid waste" from rules applied to water and sewage services. According to the government, the article breaks the equality "between basic sanitation activities, negatively impacting healthy competition among those interested in providing these services, and making investments less attractive."

For Pliny Theodore, in Fórum"Bolsonaro managed to worsen the project approved by Congress that allows the privatization of water in Brazil."

Privatization of water and sewage.

The new legal framework for basic sanitation foresees the opening of bidding processes for water and sewage services. It authorizes... entry of private initiative in concessions, facilitates the privatization of state-owned sanitation companies and gives municipalities a longer deadline to eliminate open dumps.

According to federal deputy Afonso Florence (PT-BA), deputy leader of the opposition, the project dismantles state-owned companies and does not solve the problem of access to treated water and sanitation. "It's a plundering of the sanitation sector," he wrote in... article published on Brazil 247.

The project was also criticized by other opposition leaders, such as federal deputy [name missing]. Glauber Braga (PSOL) and former president Lula, who questioned "What businessman is going to bring piped water to a favela without making a profit?The former president stated that the project will further increase inequalities in access to water and sanitation in the country.