SABESP Announces Tariff Adjustment -- August 29.

Energy Editors/Business Editors

SAO PAULO, Brazil--(BUSINESS WIRE)--Aug. 29, 2003

SABESP -- Cia. de Saneamento Basico do Estado de Sao Paulo -- (BOVESPA:SBSP3) (NYSE:SBS), the largest water and sewage utility company in the Americas and the third largest in the world (in terms of number of customers), as required by Instruction CVM No. 358, dated Jan. 3, 2002, hereby announces that, in accordance with Article 28 of the Tariff System Regulation approved by State Decree No. 1,446, dated Dec. 16, 1996, tariffs and other conditions governing water supply and sewage collection services will be adjusted by 18.95%, except social and slum tariffs that will be adjusted by 9.0%, effective as from Aug. 29, 2003.

SABESP's tariff adjustments will be calculated using the formula below:

        (VPA x IrA) + (VPB x IrB)
IRT =   -----------------------------
                      R

Where:

IRT = Tariff Adjustment Index

VPA = Amount A, which corresponds to the values recorded between July of the previous year and June of the current year, related to costs and expenses with: electric power; treatment supplies; federal taxes -- including CPMF -- Contribuicao Provisoria sobre Movimentacao Financeira (Temporary Contribution on Financial Transactions) and the Cofins/Pasep taxes on revenues; State and Municipal taxes, and charges for the exploitation of water resources for the purpose of public supply;

IrA = Adjustment Index for Amount A: the annual variation of the following ratio: Amount A values, accumulated between July of the previous year and June of the current year, divided by the accumulated billed volume in the same period, in relation to the same calculated ratio between the Amount A values, accumulated between July of two previous years and June of the previous year, divided by the accumulated billed volume in the same period;

VPB = Amount B, which is calculated as the difference between the accumulated Gross Operating Revenues, in the period from July of the previous year to June of the current year, and the Amount A for the same period;

IrB = Adjustment Index for Amount B = equals to the IPCA Index (Brazilian Wide-Ranging Consumer Price Index) published by IBGE -- Instituto Brasileiro de Geografia e Estatistica (Brazilian Institute of Geography and Statistics), accumulated in the period;

R = Gross Operating Revenues, which corresponds to the values recorded between July of the previous year to June of the current year, originated from direct and indirect operating revenues related to water supply and sewage collection services;

One should consider SABESP's official information as data source for the tariff adjustment calculation, in particular the Financial Statements periodically issued (i.e. DFP -- Demonstracoes Financeiras Padronizadas ("Standard Financial Statements according to the Brazilian Corporate Law") and ITR -- Informacoes Trimestrais ("Quarterly Financial Statements according to the Brazilian Corporate Law")).

Further details on the adjustment application will be made available on Sabesp's Web site www.sabesp.com.br and will also be published at the Sao Paulo State Official Gazette.

For additional information, please contact Helmut Bossert (tel.: [phone] and e-mail: [e-mail]) or Marisa Guimaraes (tel.: [phone] and e-mail: [e-mail]) at Sabesp Investor Relations.

www.sabesp.com.br