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Sao Paulo state water utility Sabesp has requested R740mn (US$258mn) from Brazilian federal bank Caixa Economica Federal (CEF) to finance new projects. Sabesp expects the CEF to approve the financing this year.

The R540mn loan agreement with the Japan Bank for International Cooperation (JBIC) for the utility’s R1bn Baixada Santista metropolitan region environmental recovery programme is slated for signature by both parties by month-end or early May.

A stronger real and a 19% rates hike in August helped Sabesp post an R833mn net profit in 2003 against a R651mn net loss the year before.

For the period, net sales grew 9.1% to R4.11bn and operating profit closed at R1.17bn, compared to a R935mn operating loss in 2002. Sabesp has been converting its long-term debt into reals from US dollars to lower its exposure to currency devaluation.

The company plans to invest R883mn this year, up from the previous estimate of R825mn.

Recently, Sabesp – Brazil’s largest water utility with regard to users – began serving the municipality of Itapira. The contract brings the number of municipalities Sabesp serves in the state to 368 out of a total of 645. The state has a total population of 36mn.