Rio das Ostras Sanitation PPP

active

In September 2008, the Federal government of Brazil signed a 15-year concession contract with Saneamento de Rio das Ostras SA for the update and operation of sewerage collection system of the municipality of Rio das Ostras in Rio de Janeiro state. Rio das Ostras was a rapidly growing touristic urban center which had a population of approximately 120,000 in 2008. The first phase of building its sewerage system was concluded 2004. Saneamento de Rio das Ostras SA was a special purpose vehicle for the project created by Odebrecht Engenharia Ambiental (OEA), a 100% subsidiary of Odebrecht SA. There was no much available information regarding the contract award method. The limited available information suggested that the construction phase started in late 2007/early 2008 and after that the project was formally approved and financed as a public private partnership. The project was the first public private partnership (PPP) of Rio de Janeiro and included the expansion of the main sewerage network and wastewater treatment capacity. The construction phase was expected to conclude early 2009. Once the construction phase concludes, the sewer collection system coverage would increase from 15% to 90% and waste water treatment to 100%. Under the PPP scheme, Saneamento de Rio das Ostras SA was granted the operation and maintenance the system for 15 years once the construction phase concludes. The PPP scheme included a monthly payment of R 5million to Saneamento de Rio das Ostras SA. Under a separate contract signed in 2008, Saneamento de Rio das Ostras SA was granted the operation and maintenance the sewage system during the construction phase. The total project cost was estimated to be US $206.5 million (R$ 375.9 million). The project reached financial closure in September 2008 when BNDES granted it US $144 million (R 263.1 million) loan equivalent to 70% of the project cost. The remainder of project cost was to be financed through the sponsor’s equity or commercial loans. The project was part of the Growth Acceleration Program (PAC) of the federal government and was to contribute to improve the quality of life and health of local population, reducing sanitary diseases. Construction works were concluded in October 2011. Figures converted based on the market rate, period average for 2008 published by the IMF.