BRK Ambiental provides water treatment and supply services together with sewage collection through 27 Special Purpose Companies (SPCs) – some of which operate as public concessions and others as Public Private Partnerships (‘PPP’) and service agreements.
The company has a footprint in 185 Brazilian municipalities and employs 6,000 people. Since its 2017 acquisition, BRK has invested BRL 1 billion in its principal operations to improve and increase the scope of operations.
Principal financial indicators
By the end of 2018, BRK had secured or committed financing in place for 90% of its 2019 contracted or approved investments through diversifying its sources of finance, accessing new alternatives and with improved macro conditions.
The company secured financing with IDB Invest for BRL 442 million and with Banco do Nordeste for BRL 578 million for a PPP in the Metropolitan Region of Recife. BRK also raised an additional BRL 1 billion for investments in six different concessions under the ‘Sanitation for All’ Program.
Since Brookfield’s acquisition of a controlling interest, the company has introduced a series of new, compliance-related policies and procedures. A robust system of governance is now in place, which includes proactive internal control systems installed at all the company’s concessions.
BRK continues to advance operational improvement initiatives including safety performance, completion of a water quality assurance program, and accelerating of capital expenditures to increase the scope of operations. BRK expanded its network by 585 km in 2018, enabling more customers to benefit from its services.
In addition, BRK secured a contract extension with the city of Recife, which expands the scope of operations there.
These improvements have further strengthened the company’s competitiveness and positioned it well for continued growth.
The company continues to be active in the industry and community, enhancing its relations with stakeholders, given the critical importance of sanitation in the country.
In the areas of Quality, Occupational Health and Safety and Environment, BRK saw a reduction in accidents in 2018, despite an increase of 18% in the number of hours worked as a result of BRK’s significant expansion.
SANITATION IN BRAZIL
Despite its significant hydrological resources, 35 million Brazilians have no access to drinking water. Over 100 million people have no access to sewage collection and four million have no toilets in their homes. And according to UNICEF and WHO (World Health Organization), Brazil is ranked 102nd in sanitation standards out of 189 countries.
A new study, “Sanitation and the Life of the Brazilian Woman” by BRK Ambiental in partnership with the Trata Brasil Institute and supported by UNO Women and the Global Compact, shows that while everyone suffers when faced with a lack of basic sanitation, it is women who are most impacted. Studies have shown that school-age girls without access to a bathroom have a scholastic performance 25% lower on average than other ENEM (National High School Examination) participants. The study also demonstrates that providing access to basic sanitation would immediately lift 635,000 women out of poverty, with a corresponding average annual increase of BRL 321.03 in income for each Brazilian female. This represents an aggregate gain for the country’s economy of more than BRL 12 billion every year.
Since it began its operations seven years ago in Uruguaiana in the state of Rio Grande do Sul, BRK has made capital investments of approximately BRL 145 million expanding the city’s sewage collection service from 9% to 94%. The impact of this investment is evident in public health statistics. In 2012, 3,002 cases of severe diarrhea were registered in the city. With the improvement in sanitation over these seven intervening years, in 2018 only 106 cases were registered. In addition to the impact improved sanitation has on health, there are also positive effects on job creation, a reduction in time off school and work due to illness, and the appreciation in real estate values and on tourism.
numbers / highlights
in forecasted investments OVER THE NEXT 5 YEARS
Brazil must invest at least BRL 20 billion every year for the next 15 years in order to meet universal sanitation goals called for by 2033 under the National Basic Sanitation Plan (PLANSAB). In the light of budgetary restrictions at federal, state and city government levels, private sector investments will be required in order to meet this objective.
In July 2018, Provisional Measure (MP) 844/18 was brought forward with the aim of modifying the regulatory framework for sanitation and introducing greater legal certainty, creating a more favorable environment for investment in this sector. While this measure never made it to a congressional vote, in December 2018 Provisional Measure (MP868/18) was published and is expected to go before the new legislature shortly for review.
It is expected that the current political and regulatory climate will encourage increased investment in the development of basic sanitation infrastructure in Brazil. BRK, with its long-held expertise and market intelligence, is well-positioned to be an important player in this sector.