January 27, 2017 / 7:17 PM / 2 years ago

Brazil plans to privatize Sao Francisco river transfer

BRASILIA (Reuters) - Brazil is studying private operation of the long-delayed Sao Francisco river transfer that will bring water to four states in the drought-stricken North East of the country when it is completed this year, a government official said on Friday.

A worker is seen inside the Cuncas II tunnel that will link the canals being built to divert water from the Sao Francisco river for use in four drought-plagued states. Picture taken January 28, 2014. REUTERS/Ueslei Marcelino

President Michel Temer will visit the project on Monday to open the third of six pumping stations on one of the two canals that will carry water from the Sao Francisco River to the states of Ceará, Pernambuco, Paraiba and Rio Grande do Norte.

The 470 kilometers of canals have taken a decade to build, and cost overruns have trebled to more than 8 billion reais ($2.5 billion). The government hopes water will flow down the first canal by March to bring relief to Campina Grande, a city of 350,000 that is close to running out of water.

“We have commissioned studies to see if a private-public partnership would be viable to operate the canals,” said a spokesman for National Integration Minister Helder Barbalho, who is responsible for the project.

Brazil’s federal water agency, ANA, has begun public consultations to work out how much each of the beneficiary four states should pay the operator for the transfer service. The government plans to reduce its costs by having a private operator.

Business newspaper Valor Economico reported on Friday that preliminary government estimates put the cost of operating the canals and nine pumping stations at 320 million reais a year.

The controversial Sao Francisco river transfer was promised in 2006 by former leftist President Luiz Inacio Lula da Silva as a solution to the chronic water shortages in his native North East, now into the sixth year of a severe drought.

The western canal will supply Ceará, the state hardest hit by the drought, but it will not start up before August due to the need to contract a new builder. The previous engineering firm, Mendes Junior, abandoned the project when it was implicated in a massive bribery and political kickback scandal in 2014.

Critics of the project maintain that it will drain water from the Sao Francisco river, Brazil’s longest, which has fallen to critical levels.

Farmers complain the water will go first to thirsty urban centers for human consumption before it can be used to irrigate agriculture or water cattle.

Reporting by Anthony Boadle; Editing by Leslie Adler

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