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Brazil privatizes Rio de Janeiro's water, sewage utility

The colors of the Brazilian Olympic team are projected on the statue of Christ the Redeemer by the Brazilian Olympic Committee as a reminder of how sport can inspire in the fight against COVID-19, one hundred days before the Tokyo Olympic Games, in Rio de Janeiro, Brazil, Wednesday, April 14, 2021. (AP Photo/Lucas Dumphreys)
The colors of the Brazilian Olympic team are projected on the statue of Christ the Redeemer by the Brazilian Olympic Committee as a reminder of how sport can inspire in the fight against COVID-19, one hundred days before the Tokyo Olympic Games, in Rio de Janeiro, Brazil, Wednesday, April 14, 2021. (AP Photo/Lucas Dumphreys) (Copyright 2021 The Associated Press. All rights reserved)

RIO DE JANEIRO – Rio de Janeiro state privatized its water and sewage utility on Friday, after years of broken promises to improve sewage treatment and clean up the state's polluted Guanabara Bay.

It was Brazil's biggest-ever privatization in the sewage sector, and the first to take place after a new regulatory framework for it took effect.

The utility Cedae attends to 64 municipalities in Rio state, of which 35 were included in the auction. The majority of the state-owned company's assets were divided into four water distribution and sewer service areas. Companies presented bids for the 35-year concessions of all but one: that of the eponymous capital’s west zone and six other municipalities.

Sanitation company Aegea won the concession for two of the four blocks, presenting bids worth a combined 15.4 billion reais ($2.8 billion). The company Igua took a third block with a bid of 7.3 billion reais.

A state official told reporters afterward that the fourth area will be offered again in a new auction.

Before failure to auction off the last block, Rio had forecast investment in works worth about 30 billion reais and 2.6 billion reais to clean up Guanabara Bay over the coming five years.

The winning bidders have the goal of collecting and treating 90% of sewage by 2033.

According to Trata Brasil Institute, an organization focused on water and sewage treatment research, only 65% of sewage in the city of Rio is properly treated, leaving 35% to be improperly discharged. Four of Brazil's 10 worst cities in basic sanitation are also in Rio state, surrounding Guanabara Bay.