State of the Art Sanitation in Brazil: evolution, challenges and - - PowerPoint PPT Presentation

State of the Art Sanitation in Brazil: evolution, challenges and perspectives

History of Water Supply and Sanitation Since ancient times man has learned, by experience, that the dirty water, garbage and

• ther waste could transmit diseases and

began to take steps to have clean water and get rid of debris. Was born basic sanitation

History of Water Supply and Sanitation

• The development of sanitation is always related to

the emergence and growth of cities such as Babylon in ancient Mesopotamia.

• There has been news that there were sewage

collectors in Nippur (Babylonian) since 3,750 BC

• The first public water supply system, the aqueduct
• f Jerwan was built in Assyria in 691 BC

The Cloaca Maxima is one of the oldest sewer systems in the world, built in the late sixth century BC by the last kings of Rome, based

• n the Etruscan engineering, in order to drain

the sewage and garbage to the river Tiber. History of Water Supply and Sanitation

Medieval Times to XIX Century

• In medieval times, people used to shoot craps on

the streets, sometimes reaching bystanders and

• nly privileged people had access to private

internal.

• In the XIX century there were a gradual

introduction of steam pumps and pipes of iron.

• Hydraulic Engineers (1842), then proposed a

radical reform of the health system, fully separating to drinking water from wastewater

Industrial Development and population increase

• With industrial development, from mid-century.

XVIII, there was a great exodus and populations concentrated in cities.

• Due to the growing concentration of human

populations in urban centers, coupled with industrial expansion basic sanitation has become a public health issue

• Search up preventive measures to minimize,

maintain or correct possible hazards to the environment and healthcare.

Access to Water Supply and Sanitation

• It is noteworthy that, in every age and in all

places, sanitation concentrated in urban areas and on meeting the privileged classes.

• The democratization of sanitation access is

recent phenomenon and restricted geographically.

PERSPECTIVE: A EXHAUSTED PLANET ...

• Mankind took almost 200,000 years to reach the mark of 1 billion and 500

million people

• In just a century (the XX) the world population has quadrupled, reaching

brand of 6 billion people in 2000.

• Hence the immense strain on natural resources, the large production of

waste and contaminated waters.

Country Context: Brazil in numbers

Area: 8,514,876,599 km² Population: 190.7 million (2010) 84% urban (160 million inhabitants) 55 million in metropolitan areas 26 states, 1 Federal District 5,565 municipalities 89% of the municipalities in Brazil have no more than 50,000 inhabitants Strong and stable economy The world 7th GDP (2012)

• GDP Brazil 2013 - R$ 4,838

billion (U$ 2066 billion)

• GDP per capita - R$ 24.065 (US$

10.284) But 85th in HDI - 0,730 R$ = U$ 2,34

Brazil Water Supply and Sanitation

• In Brazil , the history of sanitation also merges with the formation of cities .
• In the colonial period the water supply was made by collecting profusely and

fountains in the villages which then formed and sanitation actions were restricted to drainage of land and installation of fountains in some cities

• In the early nineteenth century , laws overseeing ports were created and avoided

the entry of ships with sick people

• At that time , the sanitary facilities of the houses were located in the back and

evictions were collected in special barrels . When were filled , after several days

• f use , resulting smelly and infected , were carried by slaves , dubbed the "

Tigers " and dumped in the current Republic Square or the waterfront , where they were washed .

• In the year 1840 , in Rio de Janeiro , was founded a company to operate services
• f barrels of water transported by a fleet of two-wheeled carts , pulled by donkeys
• With the rapid growth of the city of Rio de Janeiro were implementas

improvements in water supply systems and the product has been marketed , no longer a natural right to become a commodity.

Brazil Water Supply and Sanitation

• In middle of the nineteenth century early twentieth century began the
• rganization of basic sanitation services and the provinces deliver

concessions to foreign companies, mainly British

• In century XX, due to the dissatisfaction of the population with the poor

quality of services provided by foreign companies, one begins to think of a plan to get all dirty water through pipes to a place where she could be treated.

• Then there is the nationalization of the services and in this period you

begin to link sanitation to its resources.

• In 1912 we adopted the absolute separation system
• Generalization of the use of concrete pipes
• The drainage becomes a mandatory element of the urbanization

projects.

• In the XX Century, years 50 and 60 was create companies of mixed

economy.

• Strong participation of Development Banks, wich provided the loan

repayment through tariffs and demanded more autonomy companies.

• In 1964 was created BNH – Housing National Bank which happens to be

the manager of FGTS, main source of funds for the sector - in 1964 BNH was created.

• In 1971 the military regime establishing PLANASA – National Sanitation

Plan;

• Autonomy and self-sufficiency through tariff-based funding in returnable

resources.

• Extreme concentration of decisions to requirements of state companies on

municipal services

• Radical separation of institutions that take care of health in Brazil of planning

Sanitation.

Brazil Water Supply and Sanitation

Federal Law of Water Supply and Sanitation

In 2007 was enacted long awaited Law 11.445/2007 which establishes guidelines for sanitation and the provision of public services for urban sanitation and solid waste management

Federal Law on Solid Waste

• In 2010 was enacted Law No. 12,305 establishing the National Solid

Waste.

• Provides for environmentally sound prevention and reduction of waste

generation and disposal of waste

• Establishing the shared responsibility of waste generators:

– manufacturers , importers , distributors , merchants , citizens and holders of municipal solid waste management in reverse logistics of waste and post- consumer packaging and post -consumer

• Creates important goals that will contribute to the elimination of landfills

and establishing planning instruments at national, state , micro-regional, intercity and metropolitan and municipal levels , in addition to imposing that individuals develop their plans for Solid Waste Management.

• Also places Brazil in level playing field in the major developed countries

concerning the legal framework and innovates with the inclusion of waste pickers and collectors of recyclable materials and reusable, so when in Reverse Logistics in Selective Collection.

Principles of the Law of Solid Waste

I - prevention and precaution ; II - the polluter pays and the protector receives ; III - a systemic view on solid waste management , which considers the environmental, social , cultural , economic, technological and public health variables ; IV - sustainable development ; V - the eco-efficiency by reconciling supply, competitive prices , qualified goods and services that satisfy human needs and bring quality of life and reducing the environmental impact and consumption of natural resources to a level at least equivalent the estimated capacity of the planet Earth ; VI - cooperation between the different spheres of government , the business sector and other segments of society ; VII - the shared responsibility for product life cycle; VIII - recognition of reusable and recyclable solid waste as an economic and social value as well , generating jobs and income and promoter of citizenship; IX - respect for local and regional diversity ; X - the right of society to information and social control ; XI - the reasonableness and proportionality .

VISION Promote activities technical-scientific, political-institutional, and

• f management,

contributing to the development of the water supply and sanitation, intending to improve health, the environment and people's quality of life. MISSION Be nationally recognized as the main entity of reference in water supply and sanitation sectors.

ABES – Mission and Vision

Sanitation is one of the most lagged segment of infrastructure

Ports Sanitation Highways and Railways Airports Energy Telecom

Development and competitiveness sector levels

More Developed Less Developed

Source: Dr. Mascarenhas Presentation – CNI (Estadão Forum, 09/13/2012)

Total services levels of water and sewage in 2011 by region

Northeast North Southeast South Midwest 12,7 30,1 41,2 34,6 44

Treatment

9,6 21,3 73,8 36,2 47,5

Sewer

54,6 71,2 91,5 88,2 87,3

Water

Source: SNIS 2011

Brazil - Total Pop. Water - 82,4% Sewer - 48,10% Treatment - 37% Sewage

Urban services levels of water and sewage in 2011 by region

Northeast North Southeast South Midwest 11,8 28,4 78,8 42 52

Sewer

67,9 89,4 96,7 96,8 96

Water

Source: SNIS 2011

Brazil - Urban Pop. Water - 93,0% Sewer - 55,50% Treatment - 37% Sewage

PLANSAB criteria - Deficits

Total Population

Population with provision of collective service Population that uses collective service Quality service Improperly service Population that does not use collective service Population without provision of collective service Population that uses individual Sanitary Solution Adequate Sanitary Solution Precarious Sanitary Solutions Population without Sanitary Solution (without treatment) Source: PLANSAB

Attendance and deficit by component of water supply and sanitation in Brazil - 2010

Sources: Census (IBGE, 2011), SNIS (SNSA/MCidades, 2010), PNSB (IBGE, 2008), PLANSAB (2013).

(1) Corresponds to the population served by exposed solutions in Table 4.1, subtracted from the proportion of households hit by stoppage or interruption in 2010. Once the data about inadequated in quality of consumed water does not allow to estimate the reached population, further those that have momentary interruption, it was assumed that the deduction for outages and interruptions already cover the quota with poor quality water for all forms of supply. (2) The basis of information from IBGE adopt the category "general sewer or rainwater" and therefore figures include the release of rainwater networks. (3) Although, for purposes of conceptualization of care, septic tanks have been identified as suitable solution for the estimation of investments the number of septic tanks can not be considered fully usable for the population be future served. On the one hand, despite significant change in the number of septic tanks enumerated by Census 2010, we observed a relative reduction of this category compared to the Census 2000, it appears that there are still problems of misclassification, calling it of different types of precarious septic tanks, due to difficulties inherent in field surveys that need to be improved. Second, households served by appropriate septic tanks can count on sewer system in the future, which may lead to disabled these tanks or have their effluent released at this

• network. (4) Wasn't deduced, of a proper care, to the treated population with low-frequency collection to alternate days, due to the lack of such information in the

Census 2010 and the limitation of information PNSB. How environmentally appropriate disposal were considered volumes of solid waste for the following units: landfill, municipalities controlled landfill with up to 20,000 inhabitants, composting plant, screening station and incineration. . (5) Considered environmentally inadequate in destination to open sewer and in controlled landfills, in this case in municipalities with over 20,000 inhabitants.

Component Quality attendance Improperly attendance No attendance

X 1.000 hab % X 1.000 hab % X 1.000 hab %

Water supply 112.497(1) 59,4 64.160 33.9 12.810 6,8 Sanitary sewage 75.369(2) (3) 39,7 96.241 50,7 18.180 9,6 Solid waste handing 111.220(4) 58,6 51.690 27,2 26.880 14,2

Environment - Priority

0% 60% 60% 30% 30%

Source: PwC Research

Sanitation Management in Brazil

27 state companies serve 75% of the brazilian population Companies and municipal autarchies Private companies Consortia and differents partnerships

Suppliers

Source: SNIS 2011 – Prestadores / Formulários Completos Database (GEO05a)

Supplier Municípios atendidos (qty) Urban population Coverage Amount Water Sewage Water Sewage Regional 27 4.002 1.175 119.491.001 92.784.383 Microrregional 6 18 13 647.085 587.844 Local 1.139 936 770 40.131.832 38.889.495 Brazil 1.172 4.956 1.958 160.269.918 132.261.722

Sample of municipalities with data of sanitary sewage

Source: SNIS 2011 – Forms No information Has public system (complete form) Has no public system (simplified form)

Fundamental Principles of the Law 11.445/07

• Universal access
• Equity
• Integrality
• Intersectoral
• Sustainability
• Participation and social control
• Technological matrix

Challenges

Universalization

Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Municipal Plans - Step by Step for development

• 1. DEFINE THE

BASIS OF WORK Scope of PMS Staff and Job Schedule Mechanism for Civil Society Participation

• 2. PERFORME

DIAGNOSTIC General data of the Municipality Operational Diagnostic Institutional Diagnostic Economic- Financial Diagnostic

• 3. PREPARE

STUDY OF DEMAND AND BID Population projection Study of demand Capacity evaluation of needed bid

• 4. SETTING THE

ACTIONS FOR UNIVERSALIZATIO N OF SERVICES Formulation of PMS Objects and Goals Definition of Programs, Projects and Actions Definition of Actions for Emergencies and Contingencies

• 5. ASSESSING THE

SUSTAINABILITY OF PLAN Economic- Financial and Institutional equating Investment Programs

• 6. DEFINE

MECHANISMS OF PLAN EVALUATION Monitoring Indicators Social Control Periodic Review

• f PMS
• 7. FORMALIZE AND

SPREAD THE PLAN

Concentration: Only 8% of Brazilian municipalities collect more than they spend

Source: IBGE – Data Estadão Estadão newspaper, Economia & Negócios – January, 5 2014

The fiscal mismatch

For the 12 preceding closed months in November 2013 Source: Raul Velloso (Consultatnt) – Estadão Infographic Estadão newspaper, Economia & Negócios– January 19, 2014

States and municipalities have lost about R$ 23 billion in tax exemptions of Tax on Manufactured Products (IPI)

Investments made in water and sanitation services in the period 1995-2011, according to state and macroregion

• 5

10 15 20 25 30 35 40

NORTH NORTHEAST SOUTHEAST SOUTHEAST MIDWEST

Millions Water Sewage

Source: SNIS Note: Amounts adjusted by the IGP-DI of FGV for December 2012

Brazil in R$/millions Total 120.6M Water - R$ 60.3 Sewage - R$ 60.4

Source: SNIS Note: Amounts adjusted by the IGP-DI of FGV for December 2012

Investments made in water and sanitation services in the period 1995-2011, according to state and macroregion

• 5

10 15 20 25 30 35 40 45 NORTH NORTHEAST SOUTHEAST SOUTH MIDWEST OWN COSTLY NO COSTLY

Brazil in R$ 120M Own R$ 61 Costly R$ 40 No costly R$ 19

Investments made in 2011 by source of funds

• 1,0

2,0 3,0 4,0 5,0

NORTH NORTHEAST SOUTHEAST SOUTH MIDWEST

OWN COSTLY NO COSTLY

• 1,0

2,0 3,0 4,0 5,0

NORTH NORTHEAST SOUTHEAST SOUTH MIDWEST

Brasil in R$(mi) 0,00 5,00 10,00 OWN COSTLY NO COSTLY TOTAL R$ millions

Brazil - R$ 8.500 thousand

Necessity of Investments

Updated versin PLANSAB

ORIGIN ACTION STRUCTURING STRUCTURAL TOTAL Total Federal Agents Other Agents Total Federal Agents Other Agents Total Federal Agents Other Agents R$ % R$ % R$ % R$ % R$ % R$ %

2014-2033

Water 84.386 67.509 80 16.877 20 37.736 11.329 30 26.434 70 122.149 78.838 65 43.311 35 Sewage 156.666 133.166 85 23.500 15 25.226 5.802 23 19.424 77 181.893 138.968 76 42.924 24 R.S.U 15.523 12.418 80 3.105 20 7.838

• 7.838 100 23.361 12.418 53 10.943 47

Sewer 27.188 21.750 80 5.438 20 41.517 12.455 30 29.062 70 68.705 34.205 50 34.500 50 Management 112.345 33.703 30 78.641 70 112.345 33.703 30 78.641 70 Total 283.763 234.844 83 48.919 17 224.689 63.290 28 161.400 72 508.452 298.133 59 210.319 41 (1) The values ​derived from the forecasts of need for investments based on Scenario 1. (2) Included the resources from the general budget of the Union (OGU) and financial and funding agents of the Federal Government among others. (3) The values ​of the PAC 1 and PAC 2, contracted or in contracting, were not deducted from predicted values​, since estimated investment has as starting point the prior incidence moment of significant impacts of these programs about the projected indicators .’

Challenges

Universalization

Plansab and its 3 big programs

Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Programs

Program 1

• Integrated Sanitation

investment in structural actions

Program 2

• Rural Sanitation

Program 3

• Structural Sanitation

STRUCTURAL ACTIONS TO SUPPORT MANAGEMENT STRUCTURAL ACTIONS TO SUPPORT SERVICES PROVISION STRUCTURAL ACTIONS OF TRAINING AND TECHNICAL ASSISTANCE STRUCTURAL ACTIONS OF SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT

Structural Sanitation: four major actions

Challenges

Universalization Plansab and its 3 big programs

Management with clear incentive to good performance indicators

Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Number of researchers in Brazil is low...

1000 2000 3000 4000 5000 6000 7000 8000

Senegal Marrocos Brasil Argentina China Itália Espanha Holanda Rússia Suíça Irlanda Alemanha França Portugal Reino Unido Áustria Austrália Luxemburgo Japão Suécia Noruega Singapura Dinamarca Islândia Finlândia

For every one million inhabitants, Brazil has allocated about 700 people in R&D For China and Russia that number is 1,200 and 3,150, respectively

Source: World Bank (2009) and GO Associados

Sanitation: Contracted amounts x Disbursed amounts

18 1496 1539 17 1019 3125 3630 1642 3134 1049 3098 1264 126 92 253 486 721 700 1355 1689 1449 1523 1386 897

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Contracted Expended

Source: CEF until agosto/2013

Average rate x Total outlay

2,05 2,23 2,19 2,72 2,73 2,62 2,29 2,05 2,53 2,22

North Northeast Southeast South Midwest Average rate Total outlay

Average rate x Total outlay

2,8 1,72 2,07 2,02 1,6 1,88 2,54 1,52 2,54 1,8 2,11 2,33 2,42 2,59 2,83 2,33 2,09 1,8 2,84 2,07 2,09 2,74 3,66 2,8 1,6 2,9 3

3,64 3,14 2,09 3,07 2,8 2,97 2,28 1,49 2,79 1,41 2,34 2,66 2,46 2,51 3,15 2,5 1,89 1,51 2,87 1,91 1,93 2,54 3,43 2,51 1,54 3,14 3,25

RO AC AM RR PA AP TO MA PI CE RN PB PE AL SE BA MG ES RJ SP PR SC RS MS MT GO DF

Average rate Total outlay

Financial result of CESBs in 2010

Percentage ratio between total operating receipts and total outlay

14 das 26 CESBs apresentaram déficit financeiro em 2010. Déficit total: R$ 1 bilhão/ano.

Source: Mcidades, SNIS 2010 *COPANOR **COPASA

CESBs situation

14 of 26 CESBs had financial deficit in 2010 Total deficit: R$ 1 billion/year

10 20 30 40 50 60 70 80 DF GO MS RJ PR MG SC TO ES SP CE BA RS PA PB AM RO MA RN RR PI AL SE AC PE AP Média Source: SNIS 2011

CESBs situation

Distribution losses (%)

The 5 highest Indices State % Losses

Alagoas 59,6 Sergipe 60,3 Acre 64,7 Pernambuco 65,7 Amapá 73,3 The 5 lowest Distrito Federal 24,8 Goias 31,6 Mato Grosso do Sul 31,8 Rio de Janeiro 32,8 Paraná 33,1

Brazil 38,8

Baseado no Modelo “Brasileiro” de Excelência da

"Brazilian" Management Excellence Model (MEG)

• 1. Systems thinking
• 2. Organizational learning
• 3. Culture of Innovation
• 4. Leadership and constancy of purpose
• 5. Guidance by information processes
• 6. Vision of the future
• 7. Value generation
• 8. Valuation people
• 9. Knowledge about the customer and the

market 10.Development of partnerships 11.Social responsibility

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators

Public Policies

Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Integrating Sectoral Policies Traditional approach: Dissociated Management

Sanitation Planning Water Resources Planning Plan “A” Plan “B” Plan “C” Water supply and sanitation Solid waste disposal Sewer

Integrating Sectoral Policies New Approach: Integrated Management

Urban Planning Water Resources Planning

industry energy irrigation

• thers

Transportation and habitation Water supply and sanitation esgoto Solid waste disposal Sewer

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies

Encourage participation and the social control

Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control

Regulation

Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

The 3 main areas of Regulation

• Regulation:

– Regulatory Accounting - Asset Management – Tariff Review – Services provision How to feasible the Agencies in the country??

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation

Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental

Tax exemption of Sanitation Sector Private sector participation Understanding of climate change and its effects.

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental

Tax exemption of Sanitation Sector

Private sector participation Understanding of climate change and its effects.

Royal Aid/Tax Base Effect Autarchie Companie

PIS/Pasep Billing/Receipt1 1,00% 1,65%4 Cofins Billing

• 7,60%5

CSLL - Social Contribution on Net Income Fiscal income

• 9,00%

IRPJ Income tax legal entity Fiscal income

• 2

15-25% INSS or Municipal Pension Plan (employer) Payroll 10 - 20%3 20,00% Other entities INSS/accident insurance Payroll 2,50% 5,00% Salary-Education Payroll

• 2,50%

FGTS Payroll 8,00% se CLT 8,00% Estimated impact on receipt/ Billing6 PIS/Pasep 1,00% 1,10% Cofins

• 5,10%

CSLL - Social Contribution on Net Income

• 2,30%

IRPJ – Income tax legal entity

• 6,25%

INSS or Municipal Pension Plan (employer) )8,00% 8,00% Other entities INSS/accident insurance – the same (CLT 1,00%) 2,00% Salary-Education - the same (CLT 1,00%) 1,00% FGTS – the same (CLT 3,20%) 3,20%

Total in relation to the liquid invoicing – Statutory Regime 9,00% 28,95% Total in relation to the liquid invoicing – CLT Regime (Consolidated Labor Laws) 14,20%

Notae: (1) Some Public Adm. have obtained recognition of non-levy of Pasep. In the case of Public Administration is 1% about Current receipts + Capital Transfer received. (2) The IR withholding of employees and suppliers may be suitable as anticipated receipts of the Municipality/Autarchies (FPM). (3) Depends on the pension system adopted by the municipality (considered the most equal to the CLT). (4) Tax rate was increased up to 1.65% of billing - Law 10.637/2002 (possible deductions ≈ 0.5%); (5) Tax rate was increased up to 7.60% of billing - Law 10.637/2002 (possible deductions ≈ 2.5%); 6) Whereas gross billing equal to autarchies and company, with income/surplus of 25,0%.

Tax and labor expenses: Autarchies versus states or private companies

Financial information of the water suplly and sanitation companies– 2003 a 2007

Public, states and water suplly and sanitation companies1 Financial Information - Período 2003 a 2007

ITEMS

Companies' area of performance 2

Total SNIS5 Regionals Locals Microrregionals Total Total operating receipts 81.024.179.066 5.945.058.994 293.587.007 87.262.825.067 100.411.108.834 Total income (AT) 72.358.826.377 5.433.031.173 275.715.246 78.067.572.796 90.837.003.902 Averege malfeasance3 10,7% 8,60% 6,10% 25,40% 9,50% Total Expense (DST) 77.969.880.699 5.690.959.258 386.158.368 84.046.998.325 94.895.786.645 Exploration Expenses (DEX) 52.402.341.373 3.876.434.272 222.967.517 56.501.743.162 66.691.317.068 Own personal expenses 21.091.556.575 1.286.597.852 58.453.076 22.436.607.503 26.452.825.874 Amortization and depreciation 13.459.363.670 760.257.806 47.239.725 14.266.861.201 14.380.084.283 Interest expense and debt charges 5.848.885.049 411.348.178 79.735.173 6.339.968.400 6.446.550.051 Amortization of debt (main) 8.091.749.758 511.515.395 79.169.751 8.682.434.904 8.884.363.350 Debt service - Total 13.940.634.807 922.863.573 158.904.925 15.022.403.305 15.330.913.401 Tax expenses 9.081.725.816 679.166.181 40.416.018 9.801.308.015 9.947.704.550 Total Investments 15.026.952.325 1.181.449.345 237.458.574 16.445.860.244 18.451.211.604 Resources Onerous(FGTS, FAT and

• thers)

3.929.582.140 521.075.782 147.958.249 4.598.616.171 4.822.232.306 Resources not Onerous 2.307.456.379 4.686.768 5.477.731 2.317.620.878 2.493.546.281 Own resources 8.789.913.806 655.686.795 84.022.594 9.529.623.195 11.135.433.017 Interest / dividends on equity 2.567.558.100 77.430.000

• 2.644.988.100

2.644.988.100 Sources: Mcidades/SNSA/PMSS - SNIS 2003 a 2007 Notes

1 Companies suppliers of water and sewerage, including information on the SNIS from 2003 to 2007, taxed by Cofins, CSLL e IRPJ 2 Area of ​expertise of the Company: Regional=State, Locals= Municipal, Mcrorregionais = more than one municipality. 3 The most of autarchies (SAAEs) report income = receipts not billed for year of account 4 generation of operating cash more payment/advance of capital of stockholders 5 All suppliers with informations about SNIS in the period, including all municipal and regional autarchies

Source: Fipe Information, jan.2011

Why shouldn’t increase taxes on water supply

Water is essential, issue of equity, socail justice.

“One of the important positive externalities of sanitation occurs

• n public health. It is estimated that about 60% of child

population hospitalizations in Brazil have as causes of diseases the waterborne. (...) Investment in Salvador who elevated sewage coverage from 26% to 80% of households had significant effects in epidemiological terms in children under three years old: the prevalence of diarrhea in this age group fell 21%, 9.2 to 7.3 days per year”.

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector

Private sector participation

Understanding of climate change and its effects.

Business Logic in Public and Private sector

Stockholders and Customers GOVERNMENT PRIVATE SECTOR Objective Business Service profit and benefits for citizens Currency Profit in $, £ or € Means Currency Taxes and fees Business Service profit and benefits for customers Public Citizens and Customers State bodies

Challenges

Universalization Plansab and its 3 big programs Management with clear incentive to good performance indicators Performance Indicators Public Policies Encourage participation and the social control Regulation Clear definition of the resources sources to face the challenges of Water Supply, Sanitation and ambiental Tax exemption of Sanitation Sector Private sector participation

Understanding of climate change and its effects.

The climate change has the potential to bring destructive cycles more disastrous than those happened until now. Floods

State of São Paulo – March 15, 2013

The semi-arid, in October 2012, was the driest month of the last 83 years.

Other challenges

• Hiring forms
• Staff training
• Recognition in the metropolitan regions
• others

Dante Ragazzi Pauli

drpauli@sabesp.com.br President of ABES-DN Contact: (21) 2277-3900 www.abes-dn.org.br abes@abes-dn.org.br

Thank you!