Rio das Ostras and Odebrecht Ambiental re-negotiate PPP contract

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Rio das Ostras and Odebrecht Ambiental re-negotiate PPP contract

The city of Rio das Ostras, in Rio de Janeiro (Brazil) and Odebrecht Ambiental are to re-negotiate the city's sewage and sanitation concession contract.

According to sources the administration plans to reduce the subsidy it pays to Odebrecht Ambiental due to the fact that the concession is making the city have an increasing debt. The city is currently paying R$107 million (US$55 million) to Odebrecht per year.

The city has created a special commission to audit the concession contract and it has temporarily canceled payments to the concessionaire.

The PPP contract was signed on 11 September 2008 with financial support of BNDES a federal bank fomenting economical and social development.

The contract objective was to increase sewage collection and cleaning from 15% to 90% and sewage treatment to 100% thus benefiting Rio das Ostras' 120 thousand residents. To perform the contract, Saneamento Rio das Ostras, an SPV, exclusively dedicated to carry that specific sanitation project, was created.

The project achieved financial closure in October 2008. The total project investment was US$206 million.

The new facilities stated operation in 2009. Odebrecht Ambiental will be responsible for the operation and maintenance of the project until 2024.

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