But the Rio de Janeiro state utility did well on the operational front, with revenue rising faster than costs.
In her inauguration speech and at a subsequent event, mayor Claudia Sheinbaum outlined a raft of plans and projects.
Recycling in Brazil has remained above 90% since 2004, industry data shows.
The state now faces a problem with a bank loan, because the planned privatization formed part of the guarantee.
Of the total, US$296mn will be used to expand São Paulo city's metro network.
Through the loan, the development bank supports the national investment program for the water and sanitation sector.