CAESB: Water Company of Federal District Brazil

Interview with Celio Biavati, President of CAESB (Companhia de Saneamento Ambiental do Distrito Federal)

What have been the latest investments that CAESB has initiated over the last six months in the Federal District in Brazil?

Well, actually this CAESB presidency has now completed its ten months, which means that we have not had enough “effective” time, and yet, since the very first moment we entered CAESB many actions have already took place. CAESB cooperates with both the Federal Government of Brazil and with the Inter American Development Bank in order to finance some of our company`s structural actions and also, (especially), to finance some measures related to basic sanitation in some of the regions of the Federal District. One of CAESB biggest projects that has been already planned but doesn’t have any financial support yet is the transformation of the Lake Paranoá into a wellspring.

This is also the biggest challenge of CAESB because, until today, the whole population of the Federal District has been enjoying the water from protected regions, and the Lake Paranoá has potential to be the first one to be used as a source of water supply in this region. This plan should cost around R$ 350.000.000 and, at the moment, we are gathering the financial resources for this. As I said before, this is our biggest project and we expect it to take up to 5 years to be completed. Another project that has been on our grasp is the plan of water supply coming from Goiás. As you can see, the Federal District has a particular characteristic in Brazil – we are a City-State which means that we do not have municipalities – as compared with the rest of the 26 States of the Federation that do and are able to unite their individual municipal Basic Sanitation companies in an agreement – the Federal District cannot do this and thus, it is on our shoulders to figure out technological improvements and deal with other technical companies of Brazil and other countries and rely on sharing of know-how.

You are a public company, so how do you evaluate the relationship between the private sector and the public sector in Brazil; what is the relationship between each other?

Most effectively, CAESB has assumed the role to strengthen its relationship with the private sector. Both of them are our partners, but it is with the private sector that we hold most contracts – private companies are our biggest partners. As a matter of fact, the example of the Paranoá Lake illustrates a real daily struggle between such sectors in Brazil. It shows us that there are different ways to realize such businesses; through BOT, PPP, and, mostly, other new tools that we have been evaluating.

Normally, until today we were used to get public loans from Caixa Econômica Federal that is known for being a great public financer in our Basic Sanitation projects along with the World Bank and BID. Nevertheless, we are now seeking new financial partners with whom we could have agreements and, in my opinion, the PPP is a very interesting approach which could facilitate the fulfillment of the Paranoá Lake project.

You have tried to participate in foreign tenders in Mexico, Peru, some Spanish and German companies, and you have also shown interest to tender projects with Russia and China. How would you characterize your international strategy in foreign markets? What markets and projects are you trying to penetrate? What is your competitive advantage?

Our goal is to get onto the markets in Central and South America and also Europe. We have already been in contact with European companies and we have also had a Chinese group that wanted to share know-how in order to improve basic sanitation circumstances in China. So, our goal is to dedicate ourselves to focus our business towards this sort of relations. Part of this goal has been fulfilled last year when, after the catastrophe of Porto Principe in Haiti, the Inter-American Bank of Development personally invited CAESB to contribute with ideas and know-how, so that the basic sanitation problems could be overcome. It has been a year now that our personal has been technically active in Porto Principe and other devastated cities and the Government of Haiti is more than interested to keep the CAESB in loco to resolve such issues.

Could other countries benefit from your know-how then? If yes, which ones? Why was CAESB chosen for this project in Haiti? Was it because your technology was the most fitted to the circumstances or because of your constant contact with the Development Bank or BID?

Actually, this is a very unique situation in Brazil. We at CAESB have planned to achieve the top level category that would contribute to our business abroad and that happened thanks to low costs enterprises and because it isn’t a common procedure due to the fact that our system can be operated by the people living in such condominiums. Therefore, our system can fully fit to the agenda of undeveloped and developing countries. The wide range of our capabilities gives us prospects to deal with Africa – this has been signaled by the Vice Governor and technicians from CAESB after their recent visit to Sudan. This agreement is in progress and we are about to receive Sudanese technicians in order to share some know-how and experience in the basic sanitation with them. Other five more African countries in Africa have, as well, showed interest in doing business with us. Our experience with Condominium Sanitation here at CAESB has allowed us to be in contact with companies in Peru, Bolivia and Colombia. But it is important to make clear that it isn’t only the Condominium Sewage that gave us such opportunity to act around South America but also the fact that our general expertise in Sanitation is rather large. Our goal is to grow and to make our company stronger.

Could you briefly explain how the Condominium Sewage works?

On the whole, it is a simple plant where the excavations are not as deep as required in other types of procedures. The tabulation is simpler, the places of connections of the domestic pipelines will happen according to the position of each flat inside the entire system, which suggests that the project itself is more flexible, cheaper and faster to be collected by CAESB.

You have managed to reduce the daily consumption of water from around 230 liters per person down to a 189 liters of water per person in 10-years time. The Federal District and other regions surrounding it have one of the most important ecosystems in the world. Also, it is well-known that the Brazilian Water Company has been sued due to environmental issues. Thus, how do you approach such social responsibility, mainly the issue of sustainable development, ecological protection and protection of water sources?

I should go back in time to answer your question… Around the 1950’s, it was agreed that the development of Brazil should move from the coast line to the center, so research parties that were to explore the natural conditions of the Federal District in the XIX Century decided that the water supply should come from here – from this area – because it is a rich land with many pure water springs. Our position over the topic of hydro sustainability is very delicate because, only in this area, there are three watersheds and about 3km from here is a place where these most important watersheds grow. Our hydro supply is limited and thus we are trying to take really good care of it. In fact, the population of the Federal District has a full responsibility to care about this resource. CAESB has been focusing on spreading courses and special missions of Environmental Awareness, so that the reduction of the use of water can be achieved. We were able to collect such good data results thanks to these courses and missions. Unfortunately, the richest part of the population can easily consume 500 liters per person, while the poorest part of the population uses on average 200 liters. Still, 190-200 liters remain the average national consumption of water per person. Our main concern is to preserve our bio diversity of flora and fauna. We feel responsible and accountable for the maintenance of the watersheds and we want to act in that way because environmental protection is a very sensitive issue.

Many argue that the world is heading to another slowdown, so it might be more difficult to get finance from the banks. Also, the Sao Paulo water company is listed on the New York stock exchange which means that they receive their support from there. What do you expect to be your major challenge while securing another financial sources for financing your international ambitions?

As a matter of fact, we cannot be apart and disconnected from the new international reality of economic recession. During my latest travel trip – in Europe – I could see the difficulties concerning the financial slowdown. One advantage of the Federal District is that CASEB is public and exclusive which means that we have not exposed our shares and bonds onto the stock market as SABESP (Sao Paulo Water Company) did together with COPASA from Minas Gerais. The two of them turned out to be experiencing the market fluctuations to a great extent. Another advantage of CAESB is that in between 2005 and 2006 we had massively invested into the Federal District through the Federal Bank, the World Bank and the Inter American Bank with the goal to expand our water supply, the collection and management of sewage. Nowadays, we benefit from these measurements which suggests that we are always ready to continue to manage the water and that we can still overcome new challenges and turn them into reality like in the case of the Paranoá Lake project. Our difficulty though comes from the maintenance of the already established systems. The city is 50 years old and so are all of the systems that have been implanted into it. Because of that, we have been given a permission by the Federal Government to get a loan of US$ 300.000.000 directly from the BID. Our company has equated its challenges and, therefore, the international financial difficulties should not necessarily hit us.

Could you summarize your vision for your company’s future altogether with the advantages that the Federal District can offer to markets abroad?

First of all, I would like to say that the interest of CAESB is enormous; we need more interchange between public and privates enterprises around the world in order to increase our role in Brasilia. It is pleasant for us to exchange experiences with our international colleagues.

Our vision for the next 5 years is to contribute more to the population of the Federal District and to increase the demand for production and treatment of sewage and maintenance products. This would be the best solution for the population because it would increase the quality of life in the whole Federal District.