The failure of the R$6.2 billion sewage PPP auction by Saneago — the state-owned sanitation company of Goiás — was a clear verdict from the financial market. The session, originally scheduled to take place at B3 in São Paulo on March 25, will no longer occur. Two of the three blocks — totaling R$4.9 billion — received no bids. In the West block (R$1.3 billion), only one bidder emerged: the Águas do Cerrado consortium, formed by Quebec Ambiental, São Bento Upside and Sistemma.
Even so, there was no competition. The consortium was disqualified for failing to submit the bid bond within the envelope required by the tender rules. The document was delivered days later, past the deadline and with a date after submission, leading the committee to classify the failure as “objective and irreparable.” In a competitive auction, such an error would be irrelevant. Here, it was decisive — because there was no one else in the process. The result: the auction was canceled before it even began.
The Goiás state government’s ambition was clear: to expand sewage collection and treatment to 216 municipalities, serving more than 3.2 million people by 2033, in line with Brazil’s new sanitation framework. But the financial structure told a different story. Investment was heavily front-loaded — with between R$2 billion and R$3 billion required in the early years — while revenues were spread over two decades. Availability payments would start low and only scale up gradually, effectively forcing the operator to finance years of negative cash flow before any meaningful return.
Worse, remuneration was neither fixed nor fully predictable. Although connection to the sewage network is, in theory, mandatory, in practice it depends on enforcement, billing capacity and user adherence — factors beyond the concessionaire’s full control. Since part of the revenue was tied to the volume of sewage actually collected and treated, investors would bear the risk of deploying billions in infrastructure without guaranteed proportional revenue generation.
The financial engineering offered little comfort. The model was structured so that the net present value (NPV) would be zero — meaning payments were calibrated only to recover investment and remunerate capital at the weighted average cost of capital (WACC), with no additional premium. In simple terms: the project was designed to “close on a spreadsheet,” not to attract private capital. In real markets, investors demand returns above the cost of capital to compensate for execution risk, delays, default risk and regulatory uncertainty. Here, that premium simply did not exist.
Cost assumptions also raised concerns. A significant portion of capex and opex estimates relied on benchmarking and generic parameters — such as SINAPI tables and references from other projects — combined with Saneago’s own historical data. There is no clear evidence of robust independent validation based on real implementation costs. Major players including Aegea, BRK Ambiental, GS Inima and Acciona reviewed the project and ultimately walked away. Their conclusion: potentially underestimated costs, compressed returns and elevated risk.
The auction design further compounded the problem. The tender required a bid bond equivalent to 1% of contract value per block — potentially between R$17 million and R$31 million — in addition to a performance guarantee of around 5%, which could exceed R$150 million per contract. Competing for all three blocks meant mobilizing hundreds of millions in guarantees. And with no flexibility: winning more than one block without execution capacity could trigger severe penalties. In practice, this limited competition before the auction even began.
The clearest signal came from the insurance market. Reports indicate that insurers were reluctant to issue guarantees under the proposed conditions, given the project’s financial risk. This is the ultimate test of any PPP: when professionals specialized in pricing risk refuse exposure, the issue lies in the project structure itself.
An uncomfortable question remains: who calibrated this contractual balance? The project was structured under the coordination of the Goiás state government, with technical support from BNDES and execution by specialized consultancies and consortiums. The development bank acted as an advisor, not a decision-maker. Still, the final outcome — defined by the granting authority — reveals a disconnect between financial modeling and market reality. It is not enough to build a cash flow that works in Excel; the project must be one investors are willing to execute.
The outcome — two blocks with no interest and one failed — exposes a deeper issue: the inability to translate public ambition into bankable projects. In the same week that Paraná governor Ratinho Júnior (PSD) stepped back from the presidential race, opening space for Goiás governor Ronaldo Caiado (PSD), the state’s flagship infrastructure project ended without valid bids. For those seeking national prominence, the market’s message is clear: infrastructure is not about rhetoric — it is about execution. In this case, execution never even reached the starting line.
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