Cash-strapped Rio de Janeiro to privatize water utility

Legislators for financially strapped Rio de Janeiro state voted Monday to approve privatization of the public water utility despite a strike by workers and threats of protests.

The state assembly passed the authorization to put the water and sewage company, known as Cedae, up for sale by 41 to 28 votes.

For Rio, which six months after hosting the Olympics is unable even to pay public salaries fully, the sale is a condition of receiving a federal loan of 3.5 billion reais ($1.13 billion).

The state and city of Rio, which splurged on now mostly unused stadiums and costly transport improvements before the Olympics, are all but bankrupt.

The crisis -- which has seen hospitals run out of equipment and police go on strike over unpaid salaries -- is also partly due to the downturn in the oil industry, which has a major presence in Rio.

However, the idea of putting Cedae up for sale has been controversial.

Protesting employees and riot police have been in violent confrontations twice in the last few weeks, although a demonstration outside the assembly building Monday was so far peaceful.

On Monday, unions representing Cedae announced a strike running through Thursday "and a permanent mobilization."

However, the president of the Sintsama union in Rio, Humberto Lemos, told Globo news website that services would continue uninterrupted in a week when an estimated million tourists come to Rio for the carnival, which begins Friday.

"We will have 30 percent working. Under the law, this is an essential service. That's so there won't be a shortage of water for the population, which can't be penalized," he said.