The Legislative Assembly of the State of Minais Gerais (ALMG) approved this Wednesday, 17th, in the second round, bill 4,380/25 which authorizes the Minas Gerais government to begin the privatization process of Copasa, a state-owned sanitation company. After receiving 53 votes in favor and 18 against, the project now goes to Governor Romeu Zema (Novo) for approval.
To definitively approve the PL, authored by the governor, votes from three-fifths of parliamentarians, or 48 of the 77 deputies, were required. The session, which had privatization as its only agenda, took place amid protests by opposition deputies and protesters, including Copasa workers’ unions.
The discussions began at 10 am, and were broadcast over the internet, with several opposition deputies asking for words amidst the band of protests among the public present, which filled the plenary and was made up mainly of unions and public employees, some from Copasa itself, opposed to privatization. On one of the banners, it was written “If you privatize, your account will drown you!”, on another, “Private water is not safe to drink”. Deputies supporting the Zema government chose not to speak, to save time and carry out the vote.
The approved text allows the State to cease to be the company’s controller, but maintain the golden shareaction with veto power over strategic decisions. The future company must adopt the corporationin which no shareholder has great decision-making power.
The project foresees that privatization may occur in two ways: auction or via offering of shares. According to people familiar with the matter interviewed by Broadcast (Grupo Estado’s real-time news system), the second option must prevail, as happened with Sabesp and Sanepar, the sanitation company in Paraná.
The State of Minas Gerais has a 50.3% stake in Copasa, and would sell 45% of the shares. The company is currently valued at R$16.7 billion on B3. At an event in São Paulo at the end of November, Zema said he intends to raise “R$10 billion or more” with the operation.
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The governor also stated that he hopes to sell Copasa in the first quarter of 2026, or at the latest by April and May, to avoid the election schedule, in which he wants to be a candidate for president. The expectation is that the agenda will be used as political capital for Zema, similar to what happened with Sabesp in São Paulo.
Universalization and debts
The Minas Gerais government argues that the sale of the state-owned company is justified by the difficulty for the company and its controller – the State – to make the necessary investments to meet the sanitation targets stipulated in the sector’s legal framework, sanctioned in 2020. The legislation determines the universalization of water and sewage services in the country by 2033.
The resources obtained from privatization will be used to amortize the State’s debt to the Union or to fulfill other obligations assumed within the scope of the State Debt Payment Program (Propag), except for the allocation of part of the resources to the basic sanitation fund.
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The privatization of Copasa, a project since Zema’s first term, has only now gained momentum. In addition to the processing of PL 4,380, which arrived at ALMG at the end of September, there was a Proposed Amendment to the Constitution (PEC) to eliminate the requirement for a popular referendum to validate the sale of the company, and which was approved in November with a close vote and a lot of noise from the opposition in the plenary.
In another step towards privatization, Copasa signed an agreement with the city council of Belo Horizonte, its biggest client, to extend the period for providing sanitation services to the city from 2032 to 2073. The expectation now is that more cities will do the same.
In November, Copasa announced the choice of the bank BTG Pactual, the law firm Stocche Forbes and the consultancy EY (Ernst & Young) to evaluate possible privatization models for the company.
