Cia. de Saneamento Basico do Estado de Sao Paulo, Brazil’s biggest water utility, dropped the most in two years after regulators in Sao Paulo state further delayed a review of the rates the company charges customers.
Sabesp, as the company is known, fell 6.7 percent to 21.84 reais at the close of trading in Sao Paulo, the steepest one-day slide since August 2011. The benchmark Ibovespa slipped 1.4 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 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 soared and economic growth forecasts dropped. 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 declined to comment on the regulator’s decision. The shares have lost 25 percent this year, while the Ibovespa has fallen 20 percent.