Fernando Haddad Threatens Reversal of São Paulo Privatizations, Eyes Sabesp Review

The race for governor in São Paulo, Brazil’s wealthiest and most populous state, has escalated political risk for major infrastructure investors after Workers’ Party (PT) candidate Fernando Haddad vowed to halt the state’s privatization program and re-examine all recently signed concessions. Haddad, a former Finance Minister and the political heir apparent to President Luiz Inácio Lula da Silva, specifically cited the privatization of the state's sanitation company, Sabesp, as a target for review should he win the election against incumbent Governor Tarcísio de Freitas.

Haddad promised to put a “fine-tooth comb” ("pente fino") through contracts and concessions made under his opponent's administration, including metropolitan train lines, toll roads, and the highly publicized privatization of Sabesp. The move signals a clear pivot away from the market-friendly policies of the current administration, with Haddad stating that the financial sector will have to “wait a bit” for its “greed” to be satisfied. He argued that the funds currently channeled to companies and concessionaires were draining resources that should be allocated to essential public services.

While the candidate has threatened the potential re-nationalization of Sabesp—formally Companhia de Saneamento Básico do Estado de São Paulo, which provides water and sewage services to over 28 million people—he acknowledged the complexity of a full takeover. Haddad admitted that re-nationalization would be "very complicated" and potentially more costly than imposing stricter, fairer rules on the concessionaire to protect consumers. He has repeatedly drawn parallels between a privatized Sabesp and the controversial energy company Enel, suggesting the sanitation firm could become an "Enel of water" if not strictly regulated, citing service failures.

The election pits Haddad, the PT’s leading figure outside the presidency, against Governor Tarcísio de Freitas, an ally of former President Jair Bolsonaro who oversaw the recent privatization of Sabesp and has been a proponent of further infrastructure sales. A victory for Haddad in São Paulo, which accounts for approximately one-third of Brazil's GDP, would grant the Lula administration control over a critical political and economic counterweight, effectively halting one of the most aggressive state-level privatization agendas in the country. The result will determine the future of a multibillion-dollar state portfolio of concessions and state-owned enterprises.

The next step in this political and corporate standoff will be the gubernatorial election itself. Should Haddad win, the immediate focus will shift to his appointments for key state regulatory agencies and the legal steps he will take to initiate the "fine-tooth comb" review of the Sabesp contract and other concessions.

What it touches

The most direct impact of Haddad's threat falls on the newly privatized sanitation company Sabesp, whose shares trade on the B3 stock exchange under the ticker SBSP3. The promise of a contract review, and the slim possibility of re-nationalization, introduces political uncertainty for the company and for foreign firms with existing or planned concessions in the state, particularly those involved in metropolitan transport and toll roads. Companies in the infrastructure and basic sanitation sectors operating under long-term contracts in São Paulo state will face greater scrutiny and the prospect of renegotiation should the PT win the governorship.