By Brazil Stock Guide – Copasa (CSMG3), the Minas Gerais water utility, approved a plan to bring forward up to R$800 million in payments to municipalities as part of negotiations to renew concession contracts, amid its privatization process.
The company said it may advance up to 4% of its net revenue to municipal sanitation funds, with payments scheduled for October 2026 and March 2027. The total amount will be capped at projected values through December 2028 and discounted using the regulatory WACC.
Based on the latest figures, Copasa reported net revenue of R$7.36 billion in 2025, implying roughly R$294 million per year. Through 2028, total payments could reach approximately R$700 million to R$800 million.
The move comes as the company’s concession base — a key element of its privatization — remains under construction. A recently adopted regional model ties the formation of service clusters to voluntary municipal participation. Copasa currently operates in 637 of Minas Gerais’ 853 municipalities.
The plan does not apply to Belo Horizonte, whose contract was extended through 2073 under predefined tariff rules, including a R$1.3 billion transfer between 2026 and 2028. The capital accounts for a significant share of the company’s cash generation.
Outside the capital, contract composition remains open, directly affecting revenue visibility and valuation.
In parallel, TCE-MG has authorized only preparatory steps for the privatization, maintaining restrictions on any transfer of control. Copasa said the ruling does not prevent a potential share offering.
With a tight timeline for municipal decisions, the company is moving to consolidate its contract base before advancing the transaction. Sabesp, Equatorial and Aegea Saneamento have been cited as potential bidders, though no timeline has been set.
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