Companhia de Saneamento Basico Sabesp : Notice to the Market

Companhia de Saneamento Básico do Estado de São Paulo - Sabesp hereby informs its shareholders and the market in general about news published by the press concerning alleged irregularities in two contracts. Accordingly, the Company provides the following clarifications:

1) The construction works related to the Santos Emissary (agreement 35.333/06) were carried out when Mr. João Paulo Tavares Papa, who was mentioned in the news, had no connection with Sabesp.

2) Regarding the Praia Grande Emissary (agreement 1.622/14), the bidding process took place in 2014. At that time, Mr. João Paulo Tavares Papa was Executive Officer of Technology, Enterprises and Environment of Sabesp. After analyzing the qualification requirements of the proposal with the lowest value, it was considered unfit because it did not complie with the technical requirements described in the bidding document, given that it did not prove experience in the construction of maritime Emissary, but only in river Emissary. The other bidders met all the technical requirements. The contract was signed on June 3, 2014, when the said Executive Officer had no connection with the Company. The execution of the services did not begin because the unfit bidder appealed to the Court. The matter remains without a final decision by Court and to date there has been no payment related to this contract.

Sabesp reaffirms its commitment to fully comply with its obligation to disclose information to the market in accordance with the current regulations and with its policy for disclosing material facts.

São Paulo, April 25, 2017.

Rui de Britto Álvares Affonso
Chief Financial Officer and Investor Relations Officer