(Corrects spelling of regulator’s name and date of statement in third paragraph.)
Cia de Saneamento Basico do Estado de Sao Paulo, Brazil’s biggest water utility, dropped the most in five weeks after regulators in Sao Paulo state further delayed a review of the rates the company charges customers.
Sabesp, as the company is known, fell 6 percent to 22.02 reais at 1:30 p.m. in Sao Paulo. A close at that level would be the steepest one-day retreat since June 24. It was the biggest decline in the benchmark Ibovespa (IBOV), which slid 0.2 percent.
The Sao Paulo state water and energy regulator Arsesp suspended the scheduled rate review last month because it didn’t have enough board members to proceed, Sabesp said July 16. The agency said in a statement on its website dated yesterday that it is maintaining the suspension after finding “inconsistencies” in documents the company submitted.
“This news is negative as the outcome will continue to be uncertain for longer and the possibility of a negative result cannot be ruled out,” Banco Bradesco SA analysts Vladimir Pinto and Renata Cristovao wrote in a note to clients today. “Especially in the current political climate that makes it difficult to carry out unpopular decisions.”
President Dilma Rousseff’s poll approval ratings have plummeted to the lowest of her term after more than 1 million Brazilians took to the streets in protest as the cost of living soars and economic growth forecasts drop. Demonstrations escalated from anger over bus fare increases to discontent over corruption, the quality of public services and government spending priorities.
Sabesp’s press office didn’t immediately reply to a request for comment on the regulator’s decision. The company’s shares have lost 24 percent this year, while the Ibovespa has fallen 19 percent.
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