By Brazil Stock Guide – Rio de Janeiro’s audit court suspended a settlement that would have transferred nearly R$900 million to Águas do Rio, a unit of Aegea Saneamento, over discrepancies in sewage coverage data used in a 2021 auction. The ruling halts a discount mechanism agreed with Cedae, the state-owned water utility, and raises concerns that consumers may face higher bills. The news was first reported by O Globo.
The decision, signed by TCE-RJ counselor José Gomes Graciosa, prevents the state and Cedae from granting the agreed 24.3% discount on bulk water sales until the full court reviews the case. State lawmakers had requested the suspension, citing irregularities in the concession process led by BNDES.
Águas do Rio argues that in 21 of its 27 municipalities, actual sewage coverage was far lower than the figures published in the bidding documents. For example, Magé was expected to have 40% coverage but had none, while Duque de Caxias dropped from 43% to just 10%. The company says the gap exceeds the 18.5% contractual threshold that entitles it to compensation.
The government had defended the October 3 settlement as a way to avoid tariff hikes in December. But the concessionaire warned that the suspension now poses “a concrete risk of tariff increases this year or direct impacts on investments to expand sewage coverage and reduce pollution in Guanabara Bay.”
The TCE ordered Governor Cláudio Castro, Cedae’s president Aguinaldo Ballon, regulator Agenersa and executives from Águas do Rio to submit explanations within 15 days. BNDES must also provide full documentation of the auction process. Meanwhile, Rio’s public prosecutor is probing possible coercion of Cedae executives and conflicts of interest, given that some former managers now work at Águas do Rio.
According to legal expert Ana Tereza Parente, the data flaws stem from Brazil’s sanitation information system, which relies on self-reported figures by utilities and municipalities. “Everyone shares some responsibility,” she said. “Cedae, as the historical operator, municipalities as service holders, and the national database itself.”
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