Should the Tarcísio government privatize Sabesp? YES – 12/23/2022 – Opinion

A you know It is one of the best state-owned companies in the country. It has a very high quality technical staff, is well organized, profitable and, above all, has a culture of serving the population well. I am very proud to have presided over this remarkable company.

If so, why I think what to Sabesp should be privatized when you observe cases of renationalization in some developed countries?

First, because the attraction of private capital will allow the universalization of sanitation within the legal deadline (2033)🇧🇷 It is a non-existent concern in countries where everyone already has access to services and a fundamental measure to reduce our social inequality. Without the participation of private capital, the alternative would be the contribution of scarce fiscal resources.

Second, because the company’s productivity can improve even more when cease to be subject to the rules applicable to state-controlled companies🇧🇷 With the experience of having directed public and private companies, I affirm that the same team of directors and employees tends to produce better results in the private environment, where innovative initiatives are rewarded, than in the public environment, where possible mistakes are punished even when committed in good faith. -faith.

Third, because it took a sequence of competent state governments, starting with Mario Covas (PSDB), to produce the good situation Sabesp is in now. However, it only takes one inept or malicious government to dismantle all that work.

Fourth, because with about R$ 20 billion (market value of half of Sabesp, which belongs to the São Paulo government) much can be achieved in education, health, security and in the field itself. sanitation (drainage and solid waste), which only public administration can do.

There are several modeling alternatives in case the future government Tarcisio de Freitas (Republicans) decide for privatization. The first and most obvious would be the sale of all public shares. In that case, the buyer would likely pay a premium for controlling one of the largest sanitation companies in the world. On the other hand, not many economic groups are able to disburse such a high amount, not to mention the large investments that will be necessary for the construction of the new infrastructure.

A second route would be through increase in capital of Sabesp, similarly to the Eletrobras privatization model🇧🇷 The government would just be diluted, or it would also sell part of its shares. There would be no defined controller and, possibly, the dispute over the shares would attract greater competition. On the other hand, the São Paulo government would not pocket the control prize.

A third possibility would be to disaggregate Sabesp into regional companies before privatization. For example, metropolitan region, coast and interior. The state would sell one company at a time, every year or two. It would have the option of keeping one of the companies as a state-owned company to serve as a comparison with the privatized ones.

Whatever the decision may be —for or against privatization—, it is imperative that the government provide Ars withesp (Regulatory Agency of the State of São Paulo) the conditions to act professionally and independently. And, if the decision is for privatization, it is recommended that a small portion of the economic gains be shared with the municipal administrations.

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