The plan to privatize Sabesp, São Paulo’s sanitation company

During his successful campaign in the 2022 São Paulo gubernatorial race, Governor Tarcísio de Freitas made ambiguous statements regarding the possible privatization of Sabesp, the state sanitation company. He appeared to go from being absolutely resolute on it to saying the issue needed to be “carefully studied.”

This week, all ambiguity was over as Mr. Freitas introduced an urgent bill authorizing a follow-on share offering to hand over Sabesp to private control. 

Sabesp provides water to 28.4 million residents of São Paulo state and sewage collection to 25.2 million. The company claims to account for 30 percent of all Brazilian investments in basic sanitation. It has over 12,000 employees and an estimated market value of BRL 39 billion (USD 7.74 billion). In Q2 2023, the company announced net profits of BRL 743 million — a 76 percent increase from a year prior.

The São Paulo state government currently holds a 50.3 percent stake in Sabesp and will dilute its participation — while keeping a “golden share,” that is, holding veto powers on certain strategic decisions, such as changes to Sabesp’s name, headquarters, economic activity, or shareholder voting rights system. 

The process will be similar to Jair Bolsonaro administration’s move to hand Eletrobras, a massive...