The Sanitation's New Legal Framework universalization goals and the challenges to ensure contracts economic balance

Abstract

[Purpose] The Sanitation's New Legal Framework promoted significant changes in Federal Law No. 11,445/2007, among which the duty of the contracts for the provision of sanitation services to set targets that ensure that 99% of the population is served with drinking water and 90% of the population with sewage collection and treatment by December 31^st, 2033. For state companies, which today are responsible for providing water and sewage services in approximately 77% of Brazilian cities, the assessment of economic capacity and the addition of contracts to incorporate the new goals represents a challenge both for service holders and for the companies themselves, considering its peculiarities and the contracts peculiarities, such as the practice of cross subsidy and a single tariff structure for different providers.

[Methodology/approach/design] This context must be considered in order to analyze the possibility of incorporating the new universalization targets, as well as overcoming the obstacles related to the prohibition of extending their validity and the political criterion in tariffs definition to ensure the contracts economic balance and serve the public interest by providing an efficient, universal service at adequate rates.

[Findings] An uncertain and very difficult scenario is envisioned for the existing program contracts and for the state companies themselves.