MARKETS & TRENDS

Lead: Brazil is undergoing a massive transformation in the water supply and sewage sector due to the acceleration of privatization and the development of public-private partnership (PPP) models. In 2026, a record investment volume of over R$ 20 billion is expected through four major PPP projects covering 477 municipalities. This trend reflects a fundamental shift in the infrastructure development strategy following the enactment of the Sanitation Law in 2020. Detailed Analysis The privatization process of the water sector in Brazil gained significant momentum after the successful privatization of Sabesp (Basic Sanitation Company of the State of São Paulo) — the largest sanitation company in the country. In June 2025, the Equatorial Group consortium acquired a controlling stake in the company. This transaction became a catalyst for the development of similar projects across the country. In March 2026, the privatization of Copasa (Sanitation Company of the State of Minas Gerais) is scheduled. The state legislative assembly approved the de-statization law on February 17, receiving 53 votes in favor with the necessary 48 votes. The model includes the state retaining a controlling stake ("golden share") with veto power over strategic decisions, allowing the state to maintain influence while transferring operational control to the private sector. The PPP system is developing as an alternative to full privatization. According to research, PPPs in sanitation are characterized by the retention of state companies in the water supply sector, while the collection and treatment of wastewater are transferred to the private sector. This model is applied to accelerate investments in regions with the greatest service deficits, especially in wastewater treatment. In 2026, four major PPP projects are planned to enter the market: Goiás (R$ 6.3 billion, 216 municipalities, with a bidding date of February 25), Ceará (R$ 6.9 billion, 128 municipalities), Paraíba (R$ 3.1 billion, 85 cities), and Rio Grande do Norte (R$ 4.1 billion, 48 municipalities). The Goiás bidding was structured by the State Infrastructure Secretariat with the support of BNDES (National Bank for Economic and Social Development) and provides for an administrative concession for wastewater treatment services in three blocks. In addition to these four PPP projects, two additional concessions are on the radar: in Alagoas (block D for water supply and sewage in 21 cities, including Arapiraca) and in Rondônia (45 municipalities, R$ 4.9 billion). A total of six major models will cover 543 cities and attract R$ 27.5 billion in investments to serve about 11 million people. In Pernambuco, a bidding already took place at the end of 2025, where the BRK Ambiental-Acciona consortium won, gaining control of 151 municipalities (including the capital Recife and Fernando de Noronha) with R$ 15.4 billion in planned investments, while the manager Pátria received the Sertão block with 24 municipalities (R$ 2.9 billion). The contracts will be valid for 35 years. Impact on BRICS The development of privatization in the water sector in Brazil is significant for the BRICS bloc as a demonstration of the effectiveness of the public-private partnership model in large-scale infrastructure. Brazil, as the largest economy in the region, shows the way to mobilize private capital to address critical issues in developing countries: over 34 million Brazilians lack access to piped water, and more than 90 million live without wastewater collection and treatment systems. The involvement of international players (Acciona, BRK, Equatorial Group, Pátria Investimentos) indicates the globalization of the Brazilian sector and the attraction of foreign investments. This creates a parallel with the infrastructure initiatives of other BRICS countries, which are also seeking private financing to expand sanitation service coverage. The scale of investments — R$ 88 billion by 2026 — demonstrates the potential of private capital to address infrastructure challenges in developing economies. Forecast and Risks The most developed models are in Goiás, where the bidding has already been scheduled. It is expected that 2026 will be the year with the highest volume of PPPs in the water sector since the introduction of the Sanitation Law in 2020. The lower political complexity of PPP models (compared to full privatization) lies in the fact that these projects do not require a change of operator interacting with the population, which reduces political resistance even in election years. However, there are risks. The 2026 elections (for governors and president) could potentially complicate the implementation of projects, but analysts suggest that the municipal nature of sanitation management should ensure the political insulation of these projects from federal elections. Additionally, the incomplete implementation of previously planned investments in some regions indicates financial and executive challenges. Significant potential is seen in the possible expansion of projects by including drainage (flood control systems), which will increase the volume of investments. The São Paulo Infrastructure Secretariat plans to include drainage in some future projects, using the regulatory framework applied during the privatization of Sabesp. Summary: Brazil demonstrates a large-scale and accelerating transformation of the water sector through privatization and PPPs. The year 2026 will be a turning point with the attraction of over R$ 20 billion in investments through four major PPP projects that will cover 477 municipalities. The successful privatization of Sabesp has set a new standard, inspiring similar operations, including the gradual de-statization of Copasa. The PPP model, which retains state control in water supply while transferring wastewater treatment to the private sector, reduces political barriers. This transformation reflects the state's recognition of the need to attract private capital to achieve the universal service goals set by the Sanitation Law, while mobilizing the private sector during a period of accelerated investment in a developing economy.