Infrastructure Services in Brazil: The Role of Public-Private Partnership (PPP) in the Water & Sewerage Sector

Abstract

Managing water and sanitation services involves a complex task due to the characteristics of the public goods which are involved. The large amount of capital requirements in their very specific forms creates the structure of natural monopolies which require either public operation or strong regulation on private sector operators. The long maturity of the projects involved in conjunction with the diverse risks shared in a regulated industry causes an undersupply of investments in such public utility services. Creative contractual arrangements between public and private sector are key for boosting formation of fixed capital. This paper discusses the new possibilities of investment that emerged for the water and sewerage industry in Brazil with the new legislation of the public-private partnerships (PPP) in discussion at the National Congress.

Keywords: Public services, water and sewerage. sanitation. Public-Private Partnerships (PPP)

JEL Classification: H42, L52, L95