Economic Demographics
Market Overview
Market Opportunities
Market Entry
Competitive Landscape
Trade Barriers, Intellectual Property, Taxes
Finance
Industry Contacts
Trade Events
Contact Us
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Economic Demographics
Market Overview
Market Opportunities
Market Entry
Competitive Landscape
Trade Barriers, Intellectual Property, Taxes
Finance
Industry Contacts
Trade Events
Contact Us
Economic Demographics
Economic Demographics (2020)
Population: 211 million
Per capita income: US$ 6,673.00
GDP: US$ 1.42 trillion
Composition of GDP
Services: 75%
Industry: 20%
Agriculture: 5%
Environmental Technology Subsector Breakdown
Water and Wastewater Sector: Net Revenue of Utilities – US$ 15.9 billion (2018, latest figure available)
Municipal Solid Waste Sector: US$ 6.2 billion (2019, latest figure available)
Air Pollution Control Sector: Not Available
The Brazilian government adopts market-oriented economic policies, including reduced public spending, privatizations, and tax reforms, which aim to improve and simplify the business environment. Additionally, private sector investments are welcome and are considered essential for economic growth. The Brazilian government began a comprehensive agenda of privatization in 2019. The Investment Partnership Program (Programa de Parcerias de Investimentos: “PPI”) reported $24 billion of private investment in infrastructure projects during the 2020 pandemic and economic crisis. These newly adopted regulations by the Brazilian government sparked potential marketplace growth, despite the health and economic effects of the COVID-19 pandemic.
Water and Wastewater Water and wastewater services continue to be an area of significant challenges for Brazil. The Brazilian government estimates that 100 million people lack access to sewage collection, and 35 million lack access to potable water.
Municipalities are generally responsible for water and wastewater utilities and have the option to subcontract services from state-owned and private companies. However, Brazil’s utilities disproportionately rely on state-owned companies and fail to provide comprehensive coverage. Currently, 72% of Brazil’s population relies on water provided by 27 state-owned companies. Additionally, sewage services are available to only 67% of residents. Municipal and private companies also operate in 22.8% and 5.2%of the market, respectively. State-owned companies, such as Sabesp, Copasa, and Sanepar, are the largest investors in the sector, comprising only 5.2% of the market but investing approximately 20% of the total value invested in 2020.
Private sector investment in Brazil’s water and wastewater development is expected to increase. The Brazilian government established a new regulatory framework for the country’s basic sanitation infrastructure in July of 2020 through Law No. 14,026/20. The new law seeks to address unfair advantages give to state-owned companies and expand clean water distribution services to 99% of Brazil’s population and sewage treatment to 90% by 2033 by implementing national regulatory standards and enabling privatization among state-owned companies. Subsequently, the Brazilian government announced tenders worth US$ 11.7 billion to serve 36.2 million people by 2021. Moreover, these tenders are expected to grow to US$ 130 billion in contracts over the next ten years.
Solid Waste Management In 2019, Brazil’s Ministry of Environment presented the “National Agenda for Environmental Quality in the Cities,” which supported public policies in six areas: Ocean Trash, Municipal Solid Waste, Urban Green Areas, Air Quality, Water and Sanitation, and Contaminated Areas.
Among these, the proper disposal of Municipal Solid Waste has become a leading focus. Programs such as the “Zero Garbage Dump Program” support the Agenda for Municipal Solid Waste management efforts in Brazilian states and municipalities by: discontinuing open garbage dumps, implementing recycling, composting food waste, introducing anaerobic bio-digestion of organic waste, remediating contaminated sites, and implementing reverse logistics. https://www.mma.gov.br/agenda-ambiental-urbana/resíduos-sólidos.html . Additionally, in June 2020, the ministry launched digital solutions to trace and gather information on solid waste, which reportedly increased innovation, security, and accessibility to users.
Air Pollution Control Comprehensive air pollution control and regulation is a lingering struggle for Brazil. According to the Institute for Energy and Environment (Instituto de Energia e Meio Ambiente - IEMA) http://energiaeambiente.org.br , Brazil exceeds the recommended air pollution limits of the World Health Organization. Additionally, Brazil only implements air quality monitoring in 10 out of 27 states, while only 79 of the country’s 284 air monitoring stations are in Sao Paolo. In 2018, the National Council of the Environment (Conselho Nacional do Meio Ambiente – CONAMA)—the federal regulator of air emissions in Brazil—implemented Resolution 491 in conjunction with WHO guidelines to establish new air quality standards in Brazil. Additionally, the Brazilian Environmental Ministry announced the creation of a National Air Quality Monitoring Network in June 2019, which promised to install at least one air quality monitoring station in each Brazilian capital city
The Air Pollution Control Program for Motor Vehicles (Programa de Controle da Poluição do Ar por Veículos Automotores - PROCONVE) and the Air Pollution Control Program for Motorcycles and Similar Vehicles (Programa de Controle da Poluição do Ar por Motociclos e Veículos Similares - PROMOT) advance regulations for automobile and motorcycle emissions and advocate for cleaner technology among vehicle manufacturers. Specifically, the December 2018 Federal Resolution 492 imposed higher regulatory standards for Volatile Organic Compounds (VOCs) and Nitrogen Oxides (NOx) in light and heavy vehicles from 2022.
Market Opportunities
Brazil’s water and wastewater sector provides significant business opportunities for companies and technology suppliers interested in upcoming public bids for sanitation concession services. According to Law No 14,026/20, the tenders aim to serve 36.2 million people, and private companies can operate projects for up to 35 years. The first auctions for sanitation services were awarded in the state of Alagoas and municipality of Cariacica (state of Espírito Santo) in September 2020 and October 2020, respectively. The next tender will be for the Company of Water and Sewage of the State of Rio de Janeiro (Rio de Janeiro Companhia Estadual de Águas e Esgotos - CEDAE), which will aim to expand access to Rio de Janeiro’s sanitation system to 13.8 million people. This infrastructure investment is considered the largest in Brazil and valued at around US$ 6 billion. Other projects include the São Francisco River Water Transfer Project (Projeto de Integração do Rio São Francisco - PISF), which is the largest water infrastructure project under development in Brazil and aims to benefit 400 municipalities in four northeastern Brazil states (Ceará, Paraíba, Pernambuco, and Rio Grande do Norte) for US$ 2.1 billion. Smaller projects include sanitation concessions for the states of Acre, Amapá, Ceará, and Rio Grande do Sul, and the city of Porto Alegre. Sabesp and Copasa are the first Brazil state-owned sanitation companies to undergo privatization. They are located in São Paulo and Minas Gerais, respectively.
Sabesp, Brazil’s leading water and wastewater company, listed various requested high-demand products that may be of interest to U.S. suppliers. These products include the following: flow controls, pipes, and valves; backflow prevention valves; products for utilities disinfection; chemicals; chemical feed equipment; polymers; oxygen generation equipment; monitoring, sampling & analysis; pH analyzers; and instrumentation. Providers like Sabesp are eager to identify additional suppliers of these critical products to increase price competition.
The Brazilian Association of Private Water and Wastewater Concessionaires (Associação Brasileira das Concessionárias Privadas de Serviços Públicos de Água e Esgoto - ABCON) also provided a list of desired critical items: equipment for sludge management and sludge removal; lifters; systems for sewage and effluent treatment; systems for odor control; measurement and control equipment for color, chlorine, turbidity, etc.; pipes; valves; ozone equipment; and water meters.
The Internet of Things (IoT) continues to influence Brazil’s water and wastewater market. In 2018, Sabesp initiated a pilot project to test IoT coverage of its networks and, in 2019, contracted an IoT company to monitor water consumption. Subsequently, Sabesp installed 100,000 smart water meters to measure the consumption of its largest clients remotely. Additionally, in 2018, the Municipal Department of Water & Sewage of Rio Grande do Sul purchased 2,000 on-line sensors for applications such as telemetry, global information systems (GIS) for digital mapping, and public works monitoring.
The government of the northeastern state of Ceará is expected to publish a bids request for the construction and operation of a seawater desalination plant, which should benefit a population of 720,000 inhabitants in the metropolitan region of Fortaleza. https://www.ceara.gov.br/2020/01/13/maior-usina-de-dessalinizacao-do-brasil-sera-construida-no-ceara/
The Regional Development Ministry also manages a desalination program called Aqua Doce. In 2019, the ministry used reverse osmosis technology to install 221 desalination systems in remote areas of the semiarid region of Brazil. The membranes for these systems are imported, whereas the equipment that houses the membrane is manufactured domestically.
There is a high demand for the retrofit and renovation of water and wastewater treatment plants all over Brazil. In 2019, the government of São Paulo invested US$376 million in an initiative called the New Pinheiros River (Novo Rio Pinheiros) to address pollution concerns related to the Pinheiros River. Due to irregular occupancy and obstructions in infrastructure, traditional wastewater collection networks have failed to dispose of the sewage, so the initiative will require onsite sewage treatment solutions.
Solid Waste Management Brazil continues to demonstrate increased interest in waste-to-energy technologies as some of the country’s sanitary landfills have started to reach full capacity.
The Ministry of Environment and Ministry of Energy created the “Zero Garbage Dump Program” in May of 2019. The Ministries sought to establish a regulatory and legal environment to attract private investors through Ordinance 274/19 on Energy Recovery of Solid Waste. Such legislations resulted in various projects, including the lead acid batteries project which stimulated the recycling market through the collection and recycling of 16 million batteries, which account for 150,000 metric tons of lead per year.
Additionally, the sectorial agreement on electronics aims to increase the current number of 70 electronic waste voluntary delivery points (VDPs) to 5,000 by 2025. The projected impact is expected to recycle 150,000 metric tons of electronics. Lastly, the expansion of lubricant oil reverse logistics will increase the amount of recyclable lubricant oil by 100 million liters by 2023.
According to industry experts, the goals of minimizing resources and reducing waste demonstrate significant business opportunities for modernized waste trace technology and product manufacturing methods. In 2019, the Brazilian Association of Public Cleaning and Special Waste Companies (Associação Brasileira de Empresas de Limpeza Pública e Resíduos Especiais - ABRELPE) reported that Brazil generated 79 million metric tons of municipal solid waste and disposed 60% of it in sanitary landfills. Among the 5,570 municipalities in Brazil, only 59% have sanitary landfills, while many cities simply dispose their waste in garbage dumps. The effort to transform these dumps into small sanitary landfills creates potential business opportunities for companies that have the capacity to process around 100 metric tons of solid waste per day. Although the Brazilian subsidiaries of Caterpillar and Komatsu are currently the leading suppliers of sanitary landfill equipment (crawler tractors, compactors, excavators, etc.), there is a market for smaller equipment suppliers that can offer attractive financing terms and in-country aftersales services.
Market Entry
Brazil’s predominantly public water and wastewater markets must adhere to the April 2021 Procurement Law which established rules for public tenders in public works, services, purchases, and leases.
Generally, public utilities purchase through bidding processes. International companies without manufacturing plants or offices in Brazil can participate in this market directly or through commercial representatives, who can also provide aftersales services and other business opportunities. State and municipal utilities often subcontract private Brazilian firms to perform specific projects, which often requires international technology.
The winning bids in Brazil are chosen based on one of three factors: lowest price, best technology, or a combination of both. The determining factor will be established in advance of the bid. When bidders present similar conditions, public utilities will give preference to goods and services produced by Brazilian incorporated companies and then consider international companies with a record of investing in Brazilian research and technological development. An international company’s chances to win a bid can improve when they incorporate Brazilian goods or services, or engage the support of a subcontracted Brazilian firm. Similarly, financing proposals for the project that include credit for the purchase of local goods and services are more attractive. Bids should include relevant presentations on financing, engineering, equipment capabilities, training, and after-sale service that will originate and be carried out within Brazil.
Competitive Landscape
Brazil’s machine and equipment industry is well established and consists of domestic companies, local manufacturing plants, and international entities.
The National Union of Equipment for Basic and Environmental Sanitation (Sistema Nacional das Indústrias de Equipamentos para Saneamento Básico e Ambienta – SINDESAM), an affiliate of the Brazilian Association of Machine and Equipment Manufacturers (Associação Brasileira da Indústria de Máquinas e Equipamentos - ABIMAQ) http://www.camaras.org.br/site.aspx/Associadas-da-SINDESAM , has a membership base of 100 environmental equipment. These members include global companies such as Alfa Laval, Alvenius, Andritz, Atlas Copco, Bermad, Grundfus, DAS Water Technology, Xylem, etc.
According to a study from the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES), water and sewage treatment plant supply products are generally sourced from international firms with local subsidiaries, while water and sanitation systems and services are sourced domestically.
In addition to its largest manufacturers, Tigre and Amanco, Brazil also has approximately 50 local producers of PVC tubes and couplings. Brazil also has several manufacturers of metal tubes including Brastubo, Confab, and Saint Gobain.
Brazil currently lacks recently published data on imports related to water and wastewater equipment. However, ABIMAQ reported that Brazil imported US$ 800 million of water and wastewater equipment in 2011, which included products unavailable domestically, including heavy technological equipment.
Some Brazilian equipment manufacturers have commercial representation agreements with international firms, allowing them to provide a wide variety of solutions to their clients.
Trade Barriers, Intellectual Property, Taxes
Import Taxes Imports are subject to several taxes and fees in Brazil, which are usually paid during the customs clearance process. Three taxes account for the bulk of import costs: The Import Duty (Imposto de Importação - II), Industrialized Product Tax (Imposto Sobre Produtos Industrializados - IPI), and the Merchandise and Service Circulation Tax (Imposto sobre Circulação de Mercadorias e Serviços - ICMS). Several additional smaller taxes and fees also apply to imports. Machines and equipment face an average import tax of 14% of the products’ cost, insurance, and freight (CIF) price. The imported product costs are significantly higher than the free on board (FOB) price due to the addition of other cumulative taxes and fees.
The Ex-Tariff (Ex-Tarifário) program may grant relief to some importers. The program reduces the import duty relief on goods to 2% on capital, machinery, and equipment that are not produced in Brazil. Brazilian importers can seek the assistance of experienced custom brokers in Brazil to apply to the program.
Standards The Brazilian Association of Technical Standards (Associação Brasileira de Normas Técnicas - ABNT) is an accredited registration body that certifies quality systems, environmental management systems, and other products. The association references ISO standards, IEC standards, and U.S.-developed international standards. Several U.S. Standards Development Organizations have memorandums of understanding (MOUs) with ABNT.
ABNT/CB-177 is the Brazilian Basic Sanitation Committee for various industries including the following: water treatment and supply; residential sewage and industrial effluent collection, treatment, and disposal; sanitary landfills for industrial and municipal waste; requirements, test methods, projects, and execution procedures; and installation and maintenance services of septic tanks, tubes, and connections.
Brazilian national standards (Norma Brasileira Regulamentadora - NBR) receive ABNT’s approval and establish technical standards related to water treatment activities for human consumption. These standards include NBR 12216 (NB592) of April 1992, which establishes the requirements for water treatment plants, and NBR 15784 of April 2017, which outlines controls of chemical products for water treatment. Annex XX of the Consolidation Regulation 5/2017 provides the standards of water potability, control procedures, and surveillance of water quality for human consumption.
INMETRO, Brazil’s Institute of Metrology, is a signatory to the Mutual Recognition Arrangement (MRA) of the International Laboratory Accreditation Cooperation (ILAC), which can process test results from U.S. laboratories that are accredited by U.S. organizations.
For additional information on Brazil’s standards, please check the Country Commercial Guide for Brazil .
Finance
In accordance with Article 29 of Law 11445/2007, water and solid waste management utilities operate from tariff-generated revenues and obtain financing from local and international banks.
FGV also reported that federal resources for the sector amounted to US$ 2.54 Billion from 2007 to 2015. Brazil’s Caixa Econômica Federal and Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES) are the most important financing sources for state, municipal, and private operators. Federal subsidies are made available through Caixa Economica Federal and Fundação Nacional de Saúde.
The BNDES Finem – Environmental Sanitation and Water Resources Program offers project financing for water, wastewater, solid waste management, and recovery of degraded areas for public and private investors. Funding is limited to projects with values above US$ 1.85 million for a maximum period of 34 years. Detailed information on the program is available: https://www.bndes.gov.br/wps/portal/site/home/financiamento/produto/bndes-finem-saneamento-ambiental-recursos-hidricos
BNDES is a traditional source of medium and long-term financing for purchases of domestically manufactured machines and equipment. The U.S. Export-Import (EXIM) Bank is active in Brazil, providing both export insurance and loan guarantees for Brazilian importers. www.eximbank.gov
The U.S International Development Finance Corporation (DFC) is exploring opportunities in Brazil. The U.S. DFC provides a variety of programs including project financing, direct equity, and support for investments. https://www.dfc.gov/
Industry Contacts
Abcon/Sindcon – Brazilian Association of Private Water and Wastewater Concessionaires – abconsindcon.com.br
Instituto Trata Brasil (organization formed by companies interested in the development of the water and wastewater sector in Brazil – tratabrasil.org.br
Abimaq – Brazilian Association of Machine Manufacturers – abimaq.org.br
Abrelpe – Brazilian Association of Private Solid Waste Management Companies – abrelpe.org.br
MMA - Brazilian Environmental Ministry – mma.gov.br
Regional Development Ministry – mdr.gov.br
IEMA – Environment and Energy Institute energiaeambiente.org.br/
CETESB – Sao Paulo State Environmental Authority – cetesb.sp.gov.br
Sabesp – Sao Paulo State Water and Wastewater Company – sabesp.com.br
AESabesp – Association of Engineers of Sapesp – www.aesabesp.org.br
Trade Events
Due to the Pandemic events may be held virtually or be postponed
Water and Wastewater Technologies
Fenasan – Annual International Water and Wastewater trade show and congress– www.fenasan.com.br
FITABES – Bi-annual International Water and Wastewater trade show and congress – abes-dn.org.br
Solid Waste Management
Waste Expo Brasil – Annual International Solid Waste Management trade show and congress – www.wasteexpo.com.br
Contact Us
Patrick Levy, Business Development Specialist – U.S. Commercial Service Rio de Janeiro, Brazil – Email Patrick Levy .
Patrick H. Levy is a Commercial Specialist at the U.S. Commercial Service in Rio de Janeiro, Brazil since 2001, covering, on a country-wide basis, the Finance, Architecture/Construction/ Engineering, Mining, and Environmental sectors.
From 1988-2000, Patrick Levy was the Massachusetts Port Authority’s (Massport) Account Manager for Brazil; Usinor Brazil´s (now a branch of the worldwide steel leading producer ArcelorMittal) Commercial Manager, and Pechiney World Trade Brazil (branch of the then aluminum and packaging world leading group Pechiney) CEO’s advisor.
Patrick Levy is a graduate of the School of Law of the University of São Paulo, and he also attended The Hague Academy of International Law (The Hague, Netherlands) and the International Institute of Human Rights (University of Strasbourg, France). He is a member of the Brazilian Bar Association.
