XML 38 R27.htm IDEA: XBRL DOCUMENT

Provisions

12 Months Ended

Dec. 31, 2022

20	Provisions

(a)

Lawsuits and proceedings that resulted in provisions

(I) Statement of financial position details

The Company is party to a number of legal claims and administrative proceedings arising from the normal course of business, including civil, tax, labor and environmental matters. Management recognizes provisions in the financial statements consistently with the recognition and measurement criteria established in Note 3.15. The ultimate timing and amounts of the payments depends on the outcome of the court cases.


	December 31, 2022							December 31, 2021
	Provisions		Escrow deposits			Provisions net of deposits		Provisions		Escrow deposits			Provisions net of deposits
Customer claims (i)		151,023		(6,226	)		144,797		168,258		(10,780	)		157,478
Supplier claims (ii)		257,080		(53	)		257,027		477,854		(123	)		477,731
Other civil claims (iii)		99,462		(1,131	)		98,331		95,601		(2,523	)		93,078
Tax claims (iv)		79,532		(16,037	)		63,495		57,509		(2,693	)		54,816
Labor claims (v)		654,277		(13,979	)		640,298		349,962		(15,864	)		334,098
Environmental claims (vi)		406,872		(36	)		406,836		331,326		(34	)		331,292
Total		1,648,246		(37,462	)		1,610,784		1,480,510		(32,017	)		1,448,493

Current		924,038		—			924,038		809,821		—			809,821
Noncurrent		724,208		(37,462	)		686,746		670,689		(32,017	)		638,672

(II) Changes

Schedule of changes in provisions
	December 31, 2021			Additional provisions			Interest and inflation adjustment			Use of the accrual			Amounts not used(reversal)			December 31,2022
Customer claims (i)		168,258			12,258			21,316			(29,363	)		(21,446	)		151,023
Supplier claims (ii)		477,854			78,481			56,934			(309,321	)		(46,868	)		257,080
Other civil claims (iii)		95,601			22,485			13,708			(9,248	)		(23,084	)		99,462
Tax claims (iv)		57,509			18,216			7,837			(1,568	)		(2,462	)		79,532
Labor claims (v)		349,962			307,352			131,139			(76,884	)		(57,292	)		654,277
Environmental claims (vi)		331,326			38,632			48,511			(300	)		(11,297	)		406,872
Subtotal		1,480,510			477,424			279,445			(426,684	)		(162,449	)		1,648,246
Escrow deposits		(32,017	)		(55,546	)		(4,779	)		13,832			41,048			(37,462	)
Total		1,448,493			421,878			274,666			(412,852	)		(121,401	)		1,610,784

	December 31, 2020			Additional provisions			Interest and inflation adjustment			Use of the accrual			Amounts not used (reversal)			December 31, 2021
Customer claims (i)		160,705			32,996			29,685			(30,972	)		(24,156	)		168,258
Supplier claims (ii)		410,734			92,135			90,788			(71,238	)		(44,565	)		477,854
Other civil claims (iii)		86,083			15,477			12,850			(10,056	)		(8,753	)		95,601
Tax claims (iv)		59,678			8,630			8,054			(15,133	)		(3,720	)		57,509
Labor claims (v)		316,880			100,245			36,373			(66,220	)		(37,316	)		349,962
Environmental claims (vi)		249,582			40,477			50,957			(33	)		(9,657	)		331,326
Subtotal		1,283,662			289,960			228,707			(193,652	)		(128,167	)		1,480,510
Escrow deposits		(31,360	)		(39,586	)		(11,852	)		48,805			1,976			(32,017	)
Total		1,252,302			250,374			216,855			(144,847	)		(126,191	)		1,448,493

	December 31, 2019			Additional provisions			Interest and inflation adjustment			Use of the accrual			Amounts not used (reversal)			December 31, 2020
Customer claims (i)		253,665			16,465			19,638			(78,640	)		(50,423	)		160,705
Supplier claims (ii)		153,654			149,566			201,259			(68,801	)		(24,944	)		410,734
Other civil claims (iii)		93,910			15,944			11,109			(23,009	)		(11,871	)		86,083
Tax claims (iv)		59,143			4,333			2,737			(1,875	)		(4,660	)		59,678
Labor claims (v)		325,129			61,782			35,541			(61,039	)		(44,533	)		316,880
Environmental claims (vi)		192,950			35,392			27,718			—			(6,478	)		249,582
Subtotal		1,078,451			283,482			298,002			(233,364	)		(142,909	)		1,283,662
Escrow deposits		(42,643	)		(12,907	)		(2,225	)		18,675			7,740			(31,360	)
Total		1,035,808			270,575			295,777			(214,689	)		(135,169	)		1,252,302

(b) Lawsuits deemed as contingent liabilities

The Company is party to lawsuits and administrative proceedings relating to environmental, tax, civil and labor claims, which are assessed as contingent liabilities in the financial statements, since it either does not expect outflows to be required or the amount of the obligation cannot be reliably measured. Contingent liabilities, net of escrow deposits, are represented as follows:


	December 31, 2022		December 31, 2021
Customer claims (i)		200,966		173,875
Supplier claims (ii)		1,147,606		1,521,935
Other civil claims (iii)		1,146,048		852,735
Tax claims (iv)		1,869,583		1,548,781
Labor claims (v)		1,471,423		1,095,841
Environmental claims (vi)		3,302,843		3,201,716
Total		9,138,469		8,394,883

(c) Explanation on the nature of main classes of lawsuits

(i)

Customer claims

Refer mainly to lawsuits from customers claiming that their tariffs should be equal to those of other consumer categories, lawsuits for reduction of sewage tariff due to system losses, consequently requiring the refund of amounts charged by the Company, and lawsuits for reduction of tariff for being eligible to the Social Welfare Entity category.

(ii)

Supplier claims

These lawsuits include lawsuits filed by some suppliers alleging underpayment of monetary restatements and the economic and financial imbalance of the agreements, and are in progress at different courts.

(iii)

Other civil claims

These mainly refer to indemnities for property damage, pain and suffering, and loss of profits allegedly caused to third parties, such as vehicle accidents, claims, challenges on the methodology to collect tariffs, among others, filed at different court levels.

(iv)

Tax claims

Tax claims refer mainly to issues related to tax collections and fines in general challenged due to disagreements regarding notification or differences in the interpretation of legislation by the Company's Management.

The Municipality of São Paulo, through Law 13,476/2022, revoked the exemption of the service tax held by the Company until then and issued tax deficiency notices related to sewage services and ancillary activities, in the adjusted amount of R$ 957,199 (R$ 857,688 as of December 31, 2021), which are currently subject to three tax foreclosures. SABESP filed for a writ of mandamus against the revocation, which was denied. It also filed for provisional measures and actions for annulment, aiming at the suspension of enforceability of the credits and annulment of the tax deficiency notices, as it understands that notwithstanding the revocation of the exemption, sewage activities and ancillary activities are not on the list of activities that may be taxed by the Municipality. Regarding the middle activities, the decision was partially favorable and SABESP’s appeal was denied. SABESP filed a special appeal requesting a suspensive effect, which was not admitted at the origin. An interlocutory appeal was filed with the Superior Court of Justice. The decision of the appeal filed was favorable to the Company. Special and extraordinary appeals of the Municipality are pending decision. Regarding the middle activities, the decision was partially favorable and SABESP’s appeal was denied. SABESP filed a special appeal requesting a suspensive effect, which was not admitted at the origin. An interlocutory appeal was filed with the Superior Court of Justice. The Company deemed the lawsuit as contingent liabilities.

(v)

Labor claims

The Company is a party to a number of labor lawsuits, involving issues such as overtime, shift schedule, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, service outsourcing and other, which are at various court levels.

(vi)

Environmental claims

These refer to several administrative proceedings and lawsuits filed by government entities, including Companhia Ambiental do Estado de São Paulo – CESTESB and the Public Prosecution Office of the State of São Paulo, which aim at certain obligations to do and not to do, with the provision of fines for non-compliance, and imposition of compensation for environmental damages allegedly caused by the Company.

The main objects in which the Company is involved are: a) blame SABESP for discharging or releasing sewage without proper treatment; b) invest in the water and sewage treatment system of the municipality, under penalty of paying a fine; c) pay compensation for environmental damages; amongst others.

(d) Other concession-related legal proceedings

The Company is a party to concessions-related legal proceedings, in which it challenges compensatory issues for the resumption of sanitation services by some municipalities or by the right to continue operating said services.

The amount recorded as indemnities receivable in noncurrent assets, referring to municipalities of Cajobi, Macatuba, Álvares Florence, Embaúba, Araçoiaba da Serra and Itapira was R$ 27,539 as December 31, 2022 (R$ 27,539 as of December 31, 2021), with allowance for doubtful accounts in the full amount recorded. None of the above-mentioned municipalities are operated by the Company. When a municipality is awarded a final an unappealable favorable sentence, allowing it to repossess sanitation service assets and operations, the Brazilian legislation provides for the indemnity of the Company’s investments.

(e) Environmental lawsuits with settlements

In 2022, the Company executed court agreements totaling R$ 308,134. Of this amount, R$ 302,873 corresponds to the performance of works and R$ 5,261 to environmental compensations, the latter being recorded in Liabilities as “other liabilities”.

(f) Guarantee insurance for escrow deposit

On May 25, 2022, the Company executed an agreement effective for one year for the issue of policies under several types of guarantee insurance. The limit that can be used is R$ 600 million. The guarantee insurance for escrow deposit is used in legal claims, where instead of immediately disbursing cash, the Company uses the guarantee provided by the insurance until the end of these proceedings, limited to up to five years. As of December 31, 2022, R$ 432.2 million was available for use.