São Paulo, Brazil//—A new investment will help increase access to sewage collection services and improve water quality in the state of São Paulo while boosting the water sector’s competitiveness and promoting inclusive growth in Brazil.
IFC is providing a loan of $150 million to Companhia de Saneamento Básico do Estado de São Paulo (SABESP), one of the largest water and sanitation (W&S) companies in the world.
The loan will be used to finance investments that focus on water quality improvements and sewage collection and treatment expansion in the poorest neighborhoods of São Paulo, as part of the Pinheiros River Clean-Up Program.
In addition, IFC in partnership with SABESP will work on issuing the first pureplay blue loan in Latin America, with the proceeds to be used for investments that protect the ocean, natural water resources and urban water bodies.
The investment is aligned with IFC’s strategic priorities in Brazil, which seek to support efficient W&S utilities to improve access and quality of service. IFC will support SABESP through the Utilities for Climate (U4C) initiative, which combines advisory and investment to help water utilities tackle their most pressing needs and establish stronger, long-term relationships.
The U4C initiative also aims to stimulate knowledge sharing across companies in emerging markets facing similar issues, learning from each other’s experiences, and showcasing innovative solutions.
In the case of SABESP, the company has requested IFC’s support by conducting a diagnostic of the Non-Revenue Water Reduction Action Plan.
Improving access to W&S is critical to achieving Brazil’s inclusion goals. Due to underinvestment, the country has significant gaps in access to these essential services—with 50.8 percent coverage for sewage treatment and 84.1 percent for potable water.
To achieve its targets for universal W&S services by 2033, the country’s investment needs are estimated at BRL 750 billion (equivalent to approximately $156 billion), according to the Brazilian Association of Private Concessionaires of Public Water and Sewage Services (ABCON) and KPMG. Private sector support is key to achieving these objectives.
“SABESP is the company that invests the most in sanitation in Brazil, with one third of the resources applied in the sector. Seeking to diversify the sources of our investments and IFC’s financing, with an unprecedented blue loan issuance, reinforces our ability to make investments to improve people’s lives and bring positive impacts to the environment”, Benedito Braga, SABESP’s CEO said.
“As one of the largest W&S companies in the world, SABESP is a strategic partner for IFC in our efforts to improve access and quality of service in the water and sanitation sector. IFC’s long-term local currency financing is the first Blue Loan issuance in the W&S sector in Brazil.
The financing will help SABESP increase operational efficiency and build climate resilience.” Adil Marghub, IFC head of infrastructure and energy for Latin America and the Caribbean said.
“Water and sanitation are one of IFC’s priorities in Brazil, and our investment in SABESP is expected to have a major development impact in an essential infrastructure space.
IFC’s support will also further signal market confidence in the sector, which is vital for public health, poverty reduction, and Brazil’s future economic resilience,” Carlos Leiria Pinto, IFC’s Country Manager in Brazil said.
IFC’s investment will support 11 projects across four investment programs. Two of these programs, the Pinheiros River Clean-up and the Sanitation Improvements in Coastal Areas, will focus on sewage network construction, network interconnections and connection of households, and social work with local communities.
The other two programs, Water Supply Infrastructure in the Coastal Area and Water Supply Infrastructure in the Metropolitan Area, will focus on providing water distribution flexibility and increasing water security.
This investment is IFC’s first financing to SABESP, and represents the third project under the U4C initiative, following IFC’s debt investments in Companhia Riograndense de Saneamento (Brazil) and Izmir Water and Sewerage Administration (Turkey).
With this project, IFC aims to tackle the development challenges of Latin America and the Caribbean region by supporting sustainable growth and reducing infrastructure gaps. We have been investing in Brazil’s private sector since 1957, helping the country boost inclusive growth, innovation and employment.
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