A historic auction for the state of Pernambuco, held at B3 on Thursday, December 18th, which highlighted the entry of the Patria Group , a giant in the infrastructure sector, into the sanitation sector, marked the end of the 2025 concessions calendar. This auction broke the year's record for projected investments, totaling R$ 19 billion.

The year 2025 ended with a total of five auctions and R$ 39 billion in planned investments, the second-best annual result since the implementation of the Sanitation Regulatory Framework five years ago. For 2026, seven more major auctions are planned, as well as the privatization of the Minas Gerais Sanitation Company ( Copasa ), which should increase investors' appetite for assets in the sector.

The bidding war on the B3 stock exchange for two blocks of water and sewage services offered by the Pernambuco Sanitation Company (Compesa) generated R$ 4.2 billion in grants, in addition to R$ 19 billion in investments over the next 30 years. Compesa will continue to provide water intake and treatment services.

The auction for Block 1, which will serve 24 municipalities in the Pernambuco hinterland, including Petrolina, drew attention due to the competition involving three consortia. Patria won by offering the maximum permitted discount on the tariff, of 5%, and a grant of R$ 720 million - a premium of 727% compared to the initial value.

In Block 2, which includes 150 municipalities, including the Recife Metropolitan Region, as well as the Fernando de Noronha archipelago, there was only one competitor, the BRK - Acciona consortium – which already operates a public-private partnership (PPP) in the region. Even so, the consortium offered a 60% premium on the concession, for which it paid R$ 3.5 billion, in addition to offering a 5% discount on the tariff.

Thiago Bronzi, a partner at Patria Investimentos, said after the auction that the fund had been evaluating the possibility of entering the sanitation sector for a decade, and that in the last year it had focused on studies regarding the concession in Pernambuco.

“Our group wasn’t comfortable with the country’s regulatory structure, but with the change in the sanitation framework and the maturation that has been happening since then, we started to look at what could be our entry point,” reveals Bronzi.

According to him, Patria already has short-term financing secured for the concession in Pernambuco, which foresees R$ 2.9 billion in investments. "The capital market and the banking sector are paying close attention to the sector; there is a range of options aimed at longer-term investment," adds Bronzi, avoiding confirming whether Patria will enter the bidding for the privatization of Copasa in 2026.

In a speech that didn't hide her emotion, the governor of Pernambuco, Raquel Lyra, said that the auction was a historic day for her state.

"I'm from the Caruaru region, which is marked by droughts, where there are cities without piped water and treated water, and the cost of hiring a water truck, around R$ 800, is practically the same amount a family receives per month from Bolsa Família," he said.

"This forces many families to choose between buying water, paying the electricity bill, or sending their child to school, which is why this investment we are making is the most important of my administration," Lyra added.

Consolidation

Ilana Ferreira, technical director of Abcon , which brings together private sanitation companies, highlights what she calls the "robust aspects" of the Pernambuco concession project, structured by BNDES.

“The project includes structuring in blocks to enable cross-subsidization between municipalities, the new social tariff law, maintaining a 'vulnerable tariff', and a risk matrix that considers extraordinary climatic events, such as water scarcity,” says Ferreira, highlighting these items as regulatory innovations in bidding processes.

Furthermore, the Pernambuco auction and others held this year in states with low water and sewage coverage rates, such as Pará and Piauí, attracted major players, reinforcing the advancement of the sanitation sector since the regulatory framework was established.

In the Northern Region, for example, the level of collection and treatment is only 22.8%, and access to water is 60.9%. "The challenge for concessions and PPPs in these regions is to balance two needs: a significant volume of investment with a lower tariff, which results in smaller grants, meaning less revenue for state coffers from the auctions," he says.

The fact that only five auctions were held in 2025, compared to 17 the previous year, does not signify a setback. According to her, the low number of auctions is due to the fact that most of the large projects under development have been postponed to 2026.

"Despite their small number, the five sanitation auctions held this year mobilized R$ 39 billion in investments for 345 municipalities, signaling the significant impact of the concession model," Ferreira points out.

Copasa in the crosshairs

By 2026, the investment pipeline is expected to continue growing. Six major projects structured by BNDES are planned, along with other smaller projects, totaling R$ 27 billion in investments and covering approximately 540 municipalities.

The list includes Rio Grande do Norte, Rondônia, Alagoas, and a new project in the interior of Ceará, in addition to two PPPs, in Goiás and Paraíba. The Maranhão project was postponed. The main attraction, however, should be the privatization of the Minas Gerais state-owned company Copasa.

For Abcon, the focus for next year is expansion into locations previously considered less attractive, such as Rondônia, marking a new stage for the sector, even with a lower added investment value than in 2025 – which, according to Ferreira, was inflated by the large project in Pará.

The Abcon executive lists three major challenges for 2026. "One is to avoid policies that generate legal uncertainty, such as tax reform; another is to keep sanitation on the political agenda during the election year," she enumerates. "There is also great concern about states and municipalities that have not yet taken action since the sanitation framework – such as Acre, Roraima, Bahia, and Santa Catarina – running the risk of falling behind," she adds.

Since the new legal framework for the sector came into effect in 2020, 62 auctions have been held, benefiting 1,732 municipalities. The volume of contracted investments totals R$ 200 billion.

However, the country is still far from meeting the goal set by the framework. By 2033, Brazil needs to reach 99% of the population with access to drinking water and 90% with sewage collection and treatment – the current situation has, respectively, 84% and 55%. In other words, for now, more than 34 million Brazilians do not have access to piped water and more than 90 million live without sewage collection and treatment.

Abcon, however, remains optimistic. "Although total investment in Brazil needs to increase, in locations with private partnerships, investments are growing and breaking Capex records year after year," it says. "Sanitation is a sector with a long maturation period, and consolidated results take time."