IDB Invest and Proparco partner with Águas do Rio to provide clean water and sanitation to 10 Million Brazilians

published on 05 October 2023
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The project will benefit from expanded drinking water supply, reduced water losses, and sewage collection and treatment services.

IDB Invest is providing a long-term local currency loan package for up to BRL 1,500 million (approximately $300 million) to the Águas do Rio 1 and Águas do Rio 4 concessionaires, jointly Águas do Rio, to strengthen water and sanitation services in the State of Rio de Janeiro in Brazil. Part of the facility will be mobilized from PROPARCO, which will provide a BRL 500 million (approximately $100 million) guarantee to IDB Invest, essential to secure long-term funds in local currency from other development financial institutions (DFIs).

Águas do Rio 1 and Águas do Rio 4 are concessions of the Aegea group, Brazil’s largest private sanitation company. The Águas do Rio concessions represent one of the most significant investments in the water and sanitation sector. 

Águas do Rio 1 will benefit around 3 million people and Águas do Rio 4 another 7 million, helping a total of 10 million people in 27 municipalities in the State of Rio de Janeiro, including vulnerable communities. The projects include rehabilitation, maintenance and expansion of sanitation infrastructure and water distribution, including new water and sewage pipelines.

The projects are required to achieve universal sanitation services by 2033 given the new sanitation legal framework in place, ensuring that 99% of the population in the region will have access to drinking water and 90% to sewage collection and treatment, from the 87% and 44% estimated in the bidding process, respectively. 

The loan’s financial structure is the result of IDB Invest and PROPARCO’s joint efforts to develop innovative solutions to support water and sanitation in Brazil. IDB Invest will provide local currency solutions in Brazilian reais and PROPARCO will bear part of the risk of the project. This solution is expected to unlock DFI’s potential by mobilizing available resources in U.S. dollars and euros to local currency projects in Latin America. 

IDB Invest and PROPARCO’s support are combined with other sources of financing including BNDES (the Brazilian Development Bank), private banks and the Brazilian debt capital market. Águas do Rio is fully funded to execute BRL 24 billion (approximately $4.8 billion) of investments, the largest cycle of investments in Brazil’s sanitation sector to date.

Additionally, each project will also include performance-based incentives for a total amount of up to $15 million from the United Kingdom Sustainable Infrastructure Program (UK SIP) to support greenhouse gas (GHG) mitigation outcomes through a set of investment and operational milestones.

Águas do Rio is also expected to have a positive impact on the environment, by depolluting the Guanabara Bay, the Guandú River spring and the Rodrigo de Freitas lagoon, which are directly affected by irregular sewage disposal. The projects will also help environmental sustainability through a more efficient use of water resources by reducing physical and commercial water losses from around 60% to a target of 25% by 2035.

The projects are aligned with IDB Invest and PROPARCO’s commitment to improve people’s quality of life while tackling the crosscutting issues of climate change and social inequality by improving wastewater services. The projects are classified as 100% climate finance and aligned with the Paris Agreement, bringing climate mitigation co-benefits by reducing GHG emissions and decreasing the likelihood of contracting waterborne illness.

The projects are also aligned with seven United Nations’ Sustainable Development Goals (SDGs):  Good Health and Well-Being (SDG 3), Clean Water and Sanitation (SDG 6), Decent Work and Economic Growth (SDG 8), Resilient Infrastructure (SDG 9), Cities and Communities’ Sustainability (SDG 11), Climate Action (SDG 13), Partnerships for the Goals (SDG 17).

About IDB Invest:
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.

PROPARCO, a subsidiary of Agence Française de Développement Group, has been working with the private sector for over 45 years for a more just and sustainable world. With an international network of 23 local offices, PROPARCO works closely with its partners to build sustainable solutions in response to environmental and social challenges in Africa, the Middle East, Asia and Latin America. PROPARCO benefits from sector-based expertise as well as a wide range of financial solutions tailored to the different stages of business development, notably thanks to its Digital Africa subsidiary, and its Propulse technical assistance offering designed to scale up the impacts and performance of its partners. PROPARCO's new "Acting together for greater impact” Strategy 2023-2027 enables, strengthens and amplifies the different ways in which it works with its partners. To learn more:

About UK SIP:
The UK Sustainable Infrastructure Program (UK SIP) is providing up to £177.5 million from the UK’s International Climate Finance to support partner countries to achieve their emission reduction commitments by mobilizing private investment into low carbon infrastructure. The Program provides public and private sector technical assistance and blended finance investments in Brazil, Colombia, Mexico, and Peru.

About Águas do Rio:
Aguas do Rio is responsible for sanitation services in 27 municipalities in the state of Rio de Janeiro, including 124 neighborhoods in Rio de Janeiro city. The work of the concessionaires, recovering and expanding water and sewage services, is bringing dignity and quality of life to the population, especially to the most vulnerable in the communities of Rio, contributing to the environmental recovery of important ecosystems such as Guanabara Bay and driving economic development in the state of Rio de Janeiro.