The state court of Mato Grosso has announced its decision to cancel the concession of water supply and sanitation of the state capital Cuiabá.

The project had been signed in 2011 with CAB Ambiental, winner of the public competition. Consequently, the Cuiabá Prefecture will launch a new bid for the concession of water and sewage services within a maximum of 180 days.

The main arguments in the sentence of Judge Celia Regina Vidotti were:

• the nullity of the bid due to the fact that CAB had had competitive advantage for developing feasibility studies project under the Expression of Interest procedure, studies that were not analyzed critically by the city; and
• The lack of regulations for basic sanitation services in the design stages of the project and the bidding process.

The Cuiabá sanitation concession has also taken other challenges in recent months. In May 2016, the mayor of the city ordered the intervention of concessionaire CAB Cuiaba SA in order to ensure the continuity and adequacy of water supply and sewage services and to ensure compliance with legal, contractual and regulatory obligations.

The intervention decree indicated that the concessionaire was not reaching the contractual targets.

In addition, the decree stated other reasons as the loss of the investment capacity of CAB Cuiaba SA due to the depreciation of financial ratios of the company and the bankruptcy of its parent company, Galpar.