DCM: Pezão will sell Cedae for 9% of its real value.
The State Water and Sewage Company (Cedae) will have its first batch of shares auctioned this Friday (27); the amount required for the company to be privatized does not reach 9% of its real assets; information released by journalists Pedro Zambarda and Renato Bazan (from CTB) is contained in documents distributed by the Union of Workers in Basic Sanitation Companies of Rio (SINTSAMA-RJ); the document shows in detail all the assets of the state-owned company, and stipulates the value of R$ 36 billion, in addition to R$ 2 billion in tax refunds owed by the federal government; the Pezão government, however, intends to negotiate the state-owned company's shares for only R$ 3,4 billion.
Rio 247 - The State Water and Sewage Company (Cedae) will have its first batch of shares auctioned off this Friday (27). The amount required for the company to be privatized does not reach 9% of its real assets.
The information, released by journalists Pedro Zambarda and Renato Bazan (from CTB) in DCMThis is stated in documents distributed by the Union of Workers in Basic Sanitation and Environment Companies of Rio de Janeiro (SINTSAMA-RJ) on June 12, 2017.
The union lists, in detail, all the assets of the state-owned company, and estimates their value at R$ 36 billion, in addition to R$ 2 billion in tax refunds owed by the federal government.
The Pezão government, however, intends to negotiate the state-owned company's shares for only R$ 3,4 billion.
The dossier was delivered to Rio de Janeiro state deputies between June and August of this year. Union leaders are drawing attention to the fact that the amount demanded is less than a single year's revenue for the Rio de Janeiro water system. In 12 months, at least R$ 4 billion flows through CEDAE's coffers, mostly from the city of Rio de Janeiro.
"This vote [that allowed the auction] was riddled with irregularities, as there were no public hearings or debates on the subject. There was also evidence of political maneuvering and appointments to secure a majority vote in the Rio de Janeiro State Legislative Assembly in favor of privatization," the workers warned in a letter.
Sintsama-RJ also mentions a long-term problem that could cause greater losses than the sale price: the end of "cross-subsidization." The union president, Humberto Lemos, explains that the Rio de Janeiro water system remains economically sustainable because there is financial compensation between the more and less profitable branches.
According to the organization's leader, in the end, the public sector will be left to pay for the necessary investments, reducing the value from R$ 3,5 billion to approximately R$ 1 billion, while the shareholders will get rich by parasitizing the surplus regions. "We will have a system permanently in the red, or we will simply stop providing quality water to the population in the interior."
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