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    Brazil’s New Sanitation Law

    By Keith R | January 31, 2007

    Topics: Sanitation, Water Issues | 2 Comments »

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    After Over 20 Years of Arguing, Better Than Nothing?

    Sabesp's Alto Cotia water treatment facilityOn 05 January Brazil finally, after over two decades of debate, adopted a framework law on basic sanitation. Ironically, the law signed by President Lula is not radically different from one vetoed by his predecessor, Fernando Henrique Cardoso (FHC), on the same day (05 January) 12 years ago (1995).

    Although Lula did not veto the law outright, he utilized his line-item veto power to strike out many of the provisions praised by the bill’s proponents. Gone, for example, are the provisions giving regulatory bodies sole responsibility for setting service charges, and limiting the criteria by which they could set them. Gone is the provision linking service rates explicitly to water volumes consumed and sewage volumes emitted. Gone is the provision allowing firms a credit against their obligation to pay the Contribution to the Financing of Social Security (Contribuição para o Financiamento da Seguridade Social – COFINS) for own investments in sanitation infrastructure.

    The Lula Administration is hailing the Law as the first major policy triumph of 2007 and a significant breakthrough. Many battle-weary participants in the long debate outside the Administration have said, in effect, that the Law is better than having no federal framework at all.

    Clear as Mud

    The new Law is not without its critics, however. For example, Luiz Prado, a former head of the environment agency (FEEMA) of the State of Rio de Janeiro (RJ) and ex-Chairman of the Board of Espírito Santo’s state water utility (CESAN), argues in his blog that a major failing of the new law is its failure to deal squarely with the key question of titularidade (roughly translated as “entitlement”), in other words, who has the obligation to provide for, and charge for, sanitation and water treatment services to consumers — the state or municipality.

    Although the Constitution tends to put this service in the lap of municipalities, many municipalities cannot afford the expense without technical and financial help from federal and/or state authorities. The feds and state authorities have at time used their financial leverage to get municipalities to concede control over water and sanitation services.

    As Luiz notes, the FHC Administration tried to get a sanitation law that put control squarely in the hands of the state — at least in the case of major metropolitan areas (regiões metropolitanas) — but with concessions granted to the private sector. The politically influential mayors (prefeitos) pressured Congress into blocking that approach. The compromise text recently agreed finessed the titularidade issue by simply referring vaguely to the federal Constitution.

    The Lula Administration has tried to gloss over this shortcoming, saying it is up to the nation’s high court (Supremo Tribunal Federal – STF) will decide the issue. Nonsense, insists Luiz. The only relevant case involves a RJ law that attempted to shift titularidade to the state, and any STF judgment (not expected soon) would only apply to RJ unless other states adopted similar laws.

    It Has Its Good Side

    That said, the new law does set out relatively clear general conditions which must be met for any sanitation concession to an entity not associated with the titular (government). The concession can only be made by contract, and the contract only granted once

    1. a sanitation plan has been approved by the titular;
    2. regulatory norms governing the sector are in place;
    3. a public tender has been offered;
    4. a study is completed of the technical and economic-financial viability of the concession meeting the universal service obligation;
    5. public hearings have been held on all aspects of the planned concession, including the minutiae of the proposed contract.

    Lula declaring that privatization is not the answerJust how many concessions to private providers the Lula Administration will tolerate is not so clear, however. In his public declarations about the new Law (see box), the President rejected outright privatization (but not — at least not explicitly — service concessions to private capital firms) of the sector and declared the intent of the government to stay directly and fully engaged in getting potable water and basic sanitation services to all Brazilians.

    What is the most positive aspect of the new law?

    Luiz suggests that it is the provision requiring sanitation firms that provide services to several cities to provide separate accounts that can show how costs and income are linked to each city. The current lack of transparency and accountability not only lead to disputes between sanitation service providers and the municipal administrations they serve, but also make it difficult to assess the true costs and effectiveness of investments in infrastructure and technologies.

    Going Forward

    Adoption of the Law is only the beginning of a long, involved process, rather than simply the end of a long, involved debate. There are, of course, the implementing regulations to be drafted and issued. These will define key terms, criteria and principles, such as how progress toward universal access will be measured, what treatment criteria must be met, etc. There is also the elaboration of the National Environmental Sanitation Plan (Plano Nacional de Saneamento Ambiental – PNSA), the creation and empowerment of the state and local “social control” bodies (regulatory bodies and regional oversight councils), and the definition of key projects intended to met the “universal access” core principle of the Law within 20 years.

    This last part will be no small feat, since it will involve providing full sanitation services to favelas and rural areas. The Cities Ministry‘s National Environmental Sanitation Secretariat (SNSA) estimates that reaching the goal will require a federal investment of at least R$10 billion (about US$ billion at current exchange rates) per year. [A key question is where is Brazil going to get such funds over such a long timeframe without going seriously into debt.]

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    2 Responses to “Brazil’s New Sanitation Law”

    1. Mark Base Says:

      Learn about how they recycle stuff in Sweden!

      Recycling in Sweden

    2. Keith R Says:

      Welcome, my friend from Mybloglog, and thanks for visiting and commenting. I hope to see you back again soon.

      Thanks for the link, although I’m a bit puzzled why you mention it here in a post on sanitation policy instead of one of the many I have on waste and recycling…

      I read the piece, and love your humor and the hysterical contrast between the Swedish and British way of recycling (although not sure the British example was entirely fair!). I happen to know quite a bit about Swedish waste and recycling — more about the many ordinances, Repa, Plastkretsen, Svensk Kartongåtervinning, Svensk Glasåtervinning, Metallkretsen, and Returwell than I care to remember! — because I used to do (and substantially improved) Recycling Laws International‘s annual “country pages” for Sweden (and Norway, Finland, France, Greece, Belgium, Luxembourg, the Netherlands, Spain, Portugal and all the LAC nations), even though I am sure RLI would now deny it (they always tried to portray me as only knowledgeable about LAC, for reasons I won’t go into here). In a way I am glad to be working more on LAC now, because we’re still working on the recycling basics…

      Best Regards,

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