CAGECE’s Path Toward Sustainable and Inclusive Water Services

In Ceará, a semi-arid state with 9.2 million inhabitants, sustainable water management is a major development challenge. CAGECE has already achieved near-universal access to drinking water within its service area, with 99% coverage. However, sanitation coverage stands at 46%, still far from Brazil’s target of 90% by 2033. Water losses also remain high, with around 44% of water produced currently unbilled. To address these challenges, CAGECE has embarked on a transformation of its strategy toward 2033, built around service quality, efficiency, sustainability and stronger governance. This pathway aims to accelerate access to sanitation while improving water-resource management and strengthening resilience to climate change.

The project supports CAGECE’s own transformation pathway around three strategic priorities: improving operational performance and efficiency; strengthening environmental, social and governance practices; and integrating climate-related risks and opportunities into the company’s strategy.

AFD is providing a EUR 200 million sustainability-linked loan. Disbursements are tied to the achievement of specific transformation milestones agreed with CAGECE and set out in a sustainability matrix. This approach links financing to concrete improvements in the utility’s performance and governance.

Actions include reducing water losses, accelerating effective connections to sanitation services, strengthening occupational health and safety, adopting a gender and diversity policy, improving environmental and social risk management, and integrating climate risks into corporate governance and planning.

A EUR 500,000 technical assistance program complements the loan. It will support CAGECE in priority areas including water-loss reduction, environmental and social management, gender and diversity, and the management of climate-related risks and opportunities.

The project also contributes to the France-Brazil Action Plan adopted in 2024 and builds on cooperation already developed in Ceará around climate resilience and sustainable resource management.

The transformation pathway is expected to:

• contribute to expanding sanitation connections from the current 46% coverage toward Brazil’s 90% target by 2033;

• accelerate the reduction of water losses, currently around 44%, in line with Brazil’s national objective of 25% by 2033;

• improve access to sanitation for vulnerable populations through targeted connection, awareness and support measures;

• integrate climate risks into CAGECE’s strategy and establish adaptation and mitigation strategies approved at Board level;

• strengthen environmental and social risk management, occupational health and safety, and gender, diversity and inclusion policies;

• improve transparency and accountability through stronger ESG reporting and governance practices.

• Progress will be monitored through annual indicators and agreed milestones. Several loan disbursements, as well as a potential margin reduction, are linked to the achievement of specific sustainability commitments, helping embed these transformations over time.