IDB Invest grants loan to São Paulo sanitation company
IDB Invest, a member of the Inter-American Development Bank Group, has approved a BRL 940 million (USD 198 million) loan to Sabesp, a sanitation company controlled by the state government of São Paulo. With this financial backing, Sabesp will be able to extend sewage connections to 400,000 households.
The loan agreement also includes a BRL 470 million guarantee from Proparco, a subsidiary of the French Development Agency Group. This funding is part of the fourth phase of the Tietê River Clean-Up Program, aimed at improving sanitation access in the São Paulo region and restoring the river.
The initiative encompasses the expansion and rehabilitation of sewer systems and wastewater treatment facilities, including three existing treatment plants and the construction of a new one.
Around 1.32 million people are expected to gain access to a safely managed sanitation service. An estimated 22 million residents within the Upper Tietê River watershed will indirectly benefit from improved environmental and sanitary conditions, as confirmed by IDB Invest in their statement.
Addressing the intertwined challenges of climate change and social inequality, IDB Invest emphasizes that this project aligns with the goals of the Paris Agreement and is classified as 97.7 percent climate finance. As a result, the project offers both climate change mitigation and adaptation co-benefits.
Back in 1995, Sabesp launched the Tietê River Clean-Up Program, driven by the primary objective of enhancing environmental and sanitary conditions within the Upper Tietê River watershed in the metropolitan region of São Paulo.
Governor Tarcísio de Freitas of São Paulo has spoken of transferring control of Sabesp to private ownership. The process will involve a follow-on public offering, as the company is currently publicly traded. Mr. Freitas intends to follow a similar blueprint as the 2022 privatization of the electricity company Eletrobras, as The Brazilian Reportpreviously reported.
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