In Embattled Brazil, There's One Crisis the Nation Did Avoid

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  • When 2015 started, Sabesp was prepping for severe water cuts
  • Quick-fix infrastructure projects helped ease shortages

Amid a crippling recession, presidential impeachment proceedings and the biggest corruption scandal Brazil has ever seen, there’s one crisis the nation did dodge this year: severe water rationing.

At the start of this year, the state-run water utility known as Sabesp was facing a water shortage so devastating it was prepping contingency plans to cut supplies for up to five days a week across neighborhoods in metropolitan Sao Paulo. As 2015 draws to a close, reservoirs are filling up again and Sabesp has finished a series of quick-fix infrastructure projects that should help it weather prolonged droughts going forward.

“We have reason to be optimistic now,” Sabesp Chief Executive Officer Jerson Kelman said Friday. “We’re better prepared.”

It’s a bit of relief in a nation that has spent most of 2015 lurching from crisis to crisis. A corruption scandal that began last year at the state-run oil producer Petrobras has toppled a line of dominoes that’s still falling, contributing to oil-industry bankruptcies, skyrocketing unemployment, a rout in markets, political gridlock and, most recently, the start of proceedings to impeach President Dilma Rousseff.

Sabesp, whose full name is Cia. Saneamento Basico do Estado de Sao Paulo, fell 1.7 percent to 18.24 reais as of 3:52 p.m. in Brazil, paring its year-to-date gain to 7.2 percent. That compares with a drop of 9.5 percent for the Ibovespa index.

Last year, amid the worst drought in eight decades, Sabesp reduced pressure on pipes in a bid to save water, and it hasn’t increased the pressure since. In October 2014, 60 percent of residents in South America’s biggest metropolis said their water had been cut off at least once in the previous month, according to pollster Datafolha.

But recent heavy rainfall has changed the outlook. In the five months through Nov. 30, rainfall over Cantareira, the reservoir that supplies drinking water for 6 million people, has been 77 percent more than the year-earlier period and 18 percent above the historical average, according to Sabesp. That’s helped refill Cantareira to as much as 15 percent of capacity.

While that may still sound low, it’s a far cry from the bone-dry conditions Sao Paulo was facing around the start of the year as the traditional rainy season was nearing its end and water levels fell to about 5 percent of capacity. Now, Brazil is heading into its rainy season. In 2014, Sabesp was forced to build pipes to drain water from so-called dead reserves -- sediment-filled pools at the very center of the lakes.

To ease the water shortage, Sabesp rushed through a series of other infrastructure projects connecting reservoirs and rivers to now allow neighboring water systems to act as back-ups. It’s still drawing on dead reserves to supply clients, but it will probably return to normal water use by February, Kelman said.

“Before, we didn’t have reason for this back-up infrastructure,” he said. “Now, we’ve had to anticipate some works that wouldn’t have been ready until 2025.”