Keynote. Dr. Rui Affonso, CFO/IRO, SABESP, "Security and Sustainable Growth: The case of SABESP".

1. Round Table on Financing Water
Security and Sustainable Growth
The Case of Sabesp
Rui Affonso – CFO/IRO SABESP
Washington DC – June 2019

2. SABESP HIGHLIGTHS
COMPANY OVERVIEW MAIN OPERATIONAL INDICATORS(1)
S Mixed capital company, majority-owned by the State of
São Paulo, with significant private ownership
S Largest water and sewage service providers in the
world based on the number of Customers
S Provides water to 28 million people and sewage
services to 22.8 million people
S Covers around 65.5% of State's urban population
S Market Cap: R$ 28.7 billion (as of March, 2019)
2
OWNERSHIP STRUCTURE % (1)
(1) March/2019rch/2019
ADR III
Water Sewage
Connections (million)(2) 9.5 7.9
Coverage(3) (%) 97 89
Treatment(4)(%) --- 76
Billed Volume (m³ million) 532.6 439.8
(1) As of March 31, 2019
(2) Active and Inacttive water connections. It includes Guarulhos
(3) Services Available. It includes Guarulhos
(4) Consumer units connected to the sewage treatment – It does not include Guarulhos

3. BRAZIL
Investment
Tariff 40,64 55,2%
Debt 22,05 30,0%
Fiscal 10,90 14,8%
Total 73,59
SABESP
Investment
Tariff 17,54 69,0%
Debt 7,31 28,8%
Fiscal 0,55 2,2%
Total 25,40
*Nominal Values(Source: SNIS)
2011 to 2017
R$ Billion
Invest / Total
%
2011 to 2017
R$ Billion
Invest / Total
%
3
9,0%
8,8%
2,2%
State of
São Paulo
BRAZIL
34,5%
33,2%
FINANCING THROUGH TAX – BRAZIL X SABESP

4. 4
Resident Population of the Municipality of São Paulo
4.42% 3.50% 2.10%
2.00% 2.34% 1.28%
Source: Pesquisa de Orçamentos Familiares 2011-2013 (FIPE)
https://www.fipe.org.br/pt-br/indices/pof/#pof---2011-2013
1.74%
Public Transportation
(Bus, integ., metro,
train)
Electricity Landline phone
Cell Phone Package: phone,
tv and internet
Gas
Water and Sewage
X Low Perception of Willing to Pay
EXPENSES – AVERAGE IMPACT ON HOUSEHOLD BUDGET

5. FINIANCING WATER AND SUSTENTABILITY TROUGH TARIFFS
Productivity
Factor
(0.6920%)
New Average
Tariff
= 1
Inflation
(CPI)
100
x Previous
Average Tariff
Quality
Factor*
-
+
*Not defined yet
ANNUAL TARIFF ADJUSTMENT FORMULA
-
KEY POINTS
Natural Monopoly Essential Good
Solid Regulatory Framework
5

6. READJUSTMENTS AND REVISIONS INDEXES
OTR- Ordinary Tariff Revision
ETR- Extraordinary Tariff Revision
2015 - Readjustment + Residual + ETR = 15.24%
CPI – Between the readjustement/revision periods
OTR- Ordina
ETR- Extrao
2015 - Read
METHODOLOGY OF TARIFF REVIEW (PRICE CAP)
TaxesRequired Revenue
Average
Tariff (P0)
PRICECAP
Output of
the Model
= + +
Reduced by X Factor X
defined by Arsesp
(after year1)
Income Taxes
Revenue
Taxes
OPEX +
Personnel
Energy
Materials
Others
Water
Sewage
Others
RABt – RAB0
Amortization
Rate
Asset
Useful Life
WACC
Cost of Equity
Cost of Debt
Arsesp
Technical
Note
Sabesp 4 year Business Plan
+
Arsesp Review
CAPEX
Billed
Volume
FINIANCING WATER AND SUSTENTABILITY TROUGH TARIFFS
6
11,5% over CPI (2013-2019)
CPI

7. FINANCING TROUGH DEBT
TRADE OFFS: TERMS AND COSTS
HIGHERLOWER
TERMS
(years)
LONGERSHORTER
0 10 20 30
CAPITAL MARKETS
Debêntures, Eurobônus e FIDC
National R$
International US$
NATIONAL PUBLIC
CEF e BNDES
Currency R$
MULTILATERAL
BID, BIRD, JICA
Currency US$ e JPY
7
COSTS

8. 8
Index Currency
0 a 10
years
11 a 20
years
21 a 30
years
Source
Type
Use / Application Guarantee
EUROBONUS BRL (FLAT RATE)
All taxes and income taxes included
R$ 14,08% Private
Refinancing Only
Non-Investment
Resolution 2515
No
DEBENTURE BNDES (2) TJLP ; IPCA R$ 9,80% Pública Investment Receivables
DEBENTURE CEF (1) TR R$ 9,50% Public Investment Receivables
EUROBONUS 30 ANOS
All taxes and income taxes included
US$
9,00%
Private
Refinancing Only
Non-Investment
Resolution 2515
No
DEBENTURE
Law 12.431
IPCA
NTND
R$ 8,86% Private Investment Project Revenue
CEF – SANEAM P/ TODOS(6) TR R$ 8,50% Public Investment Receivables
BNDES FINEM – PUBLIC(6) TJLP R$ 8,44% Public Investment Receivables
DEBENTURE CDI R$ 6,99% Private Refinancing / Investment No
AB LOAN (3)
Without income tax
LIBOR 6M US$ 4,48% Private Refinancing / Investment No
BIRD – PUBLIC (5) LIBOR 6M US$ 3,68% Public Investment Government
BID – PUBLIC (4) LIBOR 3M US$ 3,01% Public Investment Government
JICA – PUBLIC JPY 1,70% Public Investment Government
COSTS
HighLow
TERMS
HighLowNote:
● Nominal Annual Interest Rate
● Loans: (1) 06/2019; (2) 04/2011; (3) 05/2008; (4) 06/2019; (5) 06/2019; (6) 06/2014; Other rates are market estimates and negotiations
● Index (Annual fee): CDI (6,40%) ; LIBOR 3M (2,4020%) ; LIBOR 6M (2,2773%) ;TR (0,00%) ; TJLP (6,26%) TLP (6,49%) ; IPCA (4,66%)
Base Jun/2019 – where possible, recently contracted rates
FINANCING TROUGH DEBT
TRADE OFFS: TERMS AND COSTS

9. Domestic External Domestic External
22 Months 36 Months
Sources availability
PSBR
Fiscal Constraints
Sovereign Guarantee
Receivables
FX impact on
balance sheet
Timing of
Structuring
Private FinancingPublic Financing
4 Months
! "
!" !"
9
FINANCING TROUGH DEBT
TRADE OFFS: TIMING OF STRUCTURING / AVAILABILITY / SOVEREIGN GUARANTEE / FX

10. FINANCING TROUGH DEBT
DOMESTIC PUBLIC TIMEFRAME
10
TERM COMMITMENT FORMALIZATION /
FINANCING AGREEMENT SIGNING
ENVIO DA SPA AO
MINISTÉRIO DAS CIDADES
ENVIO DA SPA AO
MINISTÉRIO DAS CIDADES
SHIPPING TO THE MINISTRY OF CITIES
OF THE HIRING RESULTS
SEND PROPOSALS
SHIPPING TO BANKS
LIST OF PROPOSALS
SELECTED
PUBLIC BANK REQUESTS DOCUMENTATION
PRESENTATION TO THE PUBLIC BANK OF
DOCUMENTATION
ACCORDING TO MANUAL
FRAMEWORK
ANALYSIS OF PROPOSALS
BY THE SECRETARIAT OF
SANITATION OF
MINISTRY OF CITIES
PAC ANALYSIS
PREVIOUS SELECTION
HOMOLOGATION
TECHNICAL ANALYSIS
AND
DOCUMENTATION VERIFICATION
ENABLING BY
THE MINISTRY OF CITIES
BIDDING
BIDDING ANALYSIS
DISCLOSE SELECTION PROCESS
START OF DEVELOPMENTS
Ministry of Cities
Public Banks
State Companies
Average time between
the opening of the
selection process and
the signing of the
contracts
22 months

11. 11
~ 3 YEARS
UNION
Guarantee
STATE
Counter-
Guarantee Law
Dez/2018
SABESP
Prepares
MIP
Jun / 2018
STN
IDB Sends Drafts of Loan
Agreement and
Guarantee Contract
May / 2018
SEAIN
Pre-trading and
Trading
Jul e Aug/ 2018
PGFN issues: Legal Opinion
Statement of Reasons to the
Minister of Economy,
requesting a message to the
SENATE for the Concession of
Guarantee
31 / May / 2019
Executive Secretariat of
Finance consolidated
necessary documents and
forwards to the Ministry of
Economy
04 / Jun / 2019
Ministry of Economy
06 / Jun / 2019
STN
Pre-Trading
Authorization
(authorized
without counter-
guarantee law)
Jul / 2018
BID x SABESP
Project
Transactions
Mar / 2017
SABESP
Protocol Letter
Consultation
Jun / 2017
Approval
COFIEX
Sep / 2017
SABESP
Civil House
BID
Identification
Mission
Nov / 2017
Special
Mission
Mar / 2018
Mission
Analysis
Apr / 2018
IDB Board approval
Oct / 2018
STN
Approval of the
STATE
Guarantee
05 / Apr / 2019
Approval of
SABESP's
Payment
Capacity]
12 / Apr / 2019
Elaboration of
ROF (BACEN)
Sep / 2018
SENATE
Committee on Economic Affairs
Issue Resolution - DOU
Subscription Contracts (loan
and guarantees)
Conditions of Contract
Effectiveness
Legal
Opinion of
SABESP (CJ)
Legal
Opinion of
PGFN
Legal
Opinion of
PGE SP
PGFN
Senate Resolution
BANK Approval
STN final opinion
-Publication of the Minister of
Economy
Performed Steps
Steps Not Performed
Attention Point
LOAN
SABESP
Sets Information
MIP
Mar/2019
STATE forwards
Financial Information
SADIPEM
Mar/2019STATE
Counter-
Guarantee
Economy minister
publish authorization
FINANCING TROUGH DEBT
EXTERNAL PUBLIC TIMEFRAME

12. 12
FINANCING SABESP´S INVESTMENT GROWTH:
NET INCOME (TARIFFS) + DEBT (2009-2018)
Investmentsnvestment
30,1 bi
140% nominal
36% real
2008 ..................2018
1,73
4,18
2008 ..................2018
228% nominal
84% real
0,86
2,84
17,2 bi
12,9 bi12,9 b
+
43%
57%
Dividends
+
5,2 bi
Debt
Net Income
<
Net
<<-
Net
<<-->
ncomeIntet
>>>> Tariffs

13. 13
São Paulo’s most
severe drought since
1953
20%
Real decline
R$ 3.4 billion
2014/2015 reduction
Cantareira in 2014
Cantareira in 2017
7,7
8,3
8,9
9,5
8,9 8,9
11,1
8,5%
7,5%
6,9% -6,7% 0,5%
24,3%
2010 2011 2012 2013 2014 2015 2016
Gross Revenue (R$ current billions) Net Income (R$ million)
72,14%
Decline in nominal terms
WATER SECURITY CHALENGE

14. PRODUCTION AND DISTRIBUTION 2019 Var. %
Urban population in the area served (source: SEADE) (million
inhabitants)
20.9 3.6%
730,000 inhab.
Total water treatment capacity (m³/s) 82.3 12%
Water production systems 9 -
Average monthly production (m³/s) 63.3 (9%)
Average residential consumption (m³/month) 10.8 (17%)
Treated water transfers between the systems (m³/s) Up to 12 300%
IPDT (water loss per connection per day) in the SPMR 322 (26%)
Up to 3
434
20.1
73.4
8
69.1
13.0
2013
WATER SUPPLY SYSTEM STRONGER THAN BEFORE THE WATER CRISIS OF
2014/2015
14
WATER SECURITY FINANCING IDDLE CAPACITY
REGULATORY
CHALENGE
Investment: R$ 3,8 billion
Financed: R$ 3,4 billion
RESERVOIRS 2019 Var. %
Reservoirs (water right) (m³/s) 80.3 14%
Maximum storage capacity (hm³)
(without the technical reserve)
2,106 16%
Transfers among reservoirs (m³/s) 35.4 168%
2013
70.4
1,816
13.2

15. Thank you
Rui Affonso
CFO and IR Officer
raffonso@sabesp .com.br