Itu Wastewater System

cancelled

In March 1996, CAVO was awarded a 20 year contract to build, own, operate and transfer the wastewater treatment facilities to provide service to the municipality of Itu in the State of Sao Paulo. In May 1998, the private sponsor started operating the facilities, serving a population of 110,000. CAVO was a subsidiary of the Brazilian Construcoes e Comercio Camargo Correa. The wastewater treatment project had an estimated cost of US$ 17.7 million (R$ 18.2 million, 1996 value). CAVO, was expected to invest R$ 6.35 million with internal funds; a loan of R$ 12.15 million was acquired from the BNDES (Brazilian development bank) to be paid back in 10 years. The expected rate of return on the investment is 12.9%. In January 2003, CAVO returned the concession to the local government of Itu, claiming that the payment for the sewerage services was not being made according to the terms of the concession contract. Since then, the state-owned company SAEE was delivering the services. The past due debit was under judicial dispute, as of December 2003. The company, Cavo, does not intend to resume the operations unless obliged to do so by judicial decision. None