2005			2004
	Cost	Accumulated Depreciation/ Amortization	Net	Net	Annual Depreciation rates - %
In use
Water systems:
Land	938,589	-	938,589	932,233	-
Buildings	2,660,875	(1,313,030)	1,347,845	1,412,014	4%
Connections	800,544	(318,650)	481,894	490,206	5%
Water meters	272,240	(136,728)	135,512	134,644	10%
Networks	3,235,646	(938,479)	2,297,167	2,331,990	2%
Equipment	246,893	(154,274)	92,619	105,947	10%
Others	498,950	(213,636)	285,314	283,046	2 a 20%
	8,653,737	(3,074,797)	5,578,940	5,690,080
Sewage system:
Land	352,080	-	352,080	349,553	-
Buildings	1,456,577	(515,025)	941,552	976,867	4%
Connections	846,334	(320,000)	526,334	536,348	5%
Networks	4,660,594	(1,034,414)	3,626,180	3,615,156	2%
Equipment	500,449	(351,579)	148,870	181,455	10%
Others	15,493	(993)	14,500	11,530	2 a 20%
	7,831,527	(2,222,011)	5,609,516	5,670,909
General use:
Land	102,952	-	102,952	102,868	-
Buildings	120,853	(64,963)	55,890	59,372	4%
Transportation     equipment	133,433	(122,842)	10,591	15,386	20%
Furniture, fixtures     and equip.	280,097	(180,729)	99,368	126,300	10%
Free lease land	25,312	-	25,312	25,312	-
Free lease assets	9,510	(2,990)	6,520	6,591	-
	672,157	(371,524)	300,633	335,829
Subtotal in use	17,157,421	(5,668,332)	11,489,089	11,696,818
Construction in progress:
Water systems	683,094	-	683,094	561,878
Sewage systems	1,421,491	-	1,421,491	1,245,036
Others	19,907	-	19,907	19,804
Subtotal construction   in progress	2,124,492	-	2,124,492	1,826,718
Intangible assets	582,981	(80,463)	502,518	517,386
Total	19,864,894	(5,748,795)	14,116,099	14,040,922

(a) Disposals of property, plant and equipment

In 2005, the Company wrote-off property, plant and equipment in the amount of R$ 19,051 (R$ 34,616 in 2004 which resulted in a total loss of R$ 34,440). Of these losses, R$ 9,879 (R$ 26,034 in 2004) related to the obsolescence, theft or disposal of assets in use, and R$ 9,172 (R$ 8,582 in 2004) related to construction in progress, due to discontinued construction, nonproductive wells and construction in progress projects wich were determined to be no longer economically feasible.


(b) Capitalization of interests and financial charges

The Company capitalized interests and monetary variation, including foreing currency exchange variation, to property, plant and equipment in the amount of R$ 4,335 for the year ended on December 31, 2005 (2004 - R$ 4,907), during the period in wich the related assets were under construction.


(c) Construction in progress

Construction in progress primarily related to new projects and operating improvements, are as follows:

	2005	2004
Water systems:
Networks and connections	238,122	231,653
Transmission	36,712	30,020
Water treatment	97,502	101,033
Sub-transmission	155,493	86,502
Production and storage	116,306	74,092
Other	38,959	38,578
Total water systems	683,094	561,878
Sewage systems:
Collection	1,139,045	990,325
Treatment	182,967	166,916
Others	99,479	87,795
Total sewage systems	1,421,491	1,245,036
Others	19,907	19,804
Total	2,124,492	1,826,718

Estimated disbursements relating to construction works already contracted are estimated to be approximately R$ 957,000 for fiscal years from 2006 to 2011 (unaudited).


(d) Expropriations

Development of major water and sewage systems frequently requires the expropriation or establishment of rights of way through third-party properties. The owners of these properties are generally compensated either through negotiated settlements or judicial arbitration in conformity with applicable legislation.

Disbursements to be effected as from fiscal year 2006 are estimated to be approximately R$ 279,621 (unaudited), which will be paid out of Company funds. The related assets acquired as a result of these negotiations are recorded as property, plant and equipment when the expropriation is complete. The total amount of property, plant and equipment referring to expropriations in 2005 was R$ 11,472 (R$ 5,423 in 2004).


(e) Assets in guarantee

At December 31, 2005 and 2004, the Company had assets in the amount of R$ 249,034 provided as guarantee under the Special Tax Debt Refinancing Program - PAES (Note 11).


(f) Non-operating assets

The Company had R$ 31,832 at December 31, 2005 (2004 - R$ 31,903) referring to other nonoperating assets, comprised primarily of land surrounding reservoirs.


(g) Revaluation

Property, plant and equipment items were revaluated in 1990 and 1991 and have been depreciated at annual rates which take into consideration the estimated remaining economic useful lives of the assets as determined in the respective valuation reports that, as a rule, fall within the ranges of the above presented rates.

As permitted by CVM Instruction 197/93, the Company did not record a provision for the tax effects (deferred taxes) on the surplus of the revaluation of property, plant and equipment carried out in 1990 and 1991. Had the income tax and social contribution on the revaluation reserve been accounted for, the unrealized amount at December 31, 2005 would be R$ 461,068 (2004 - R$ 491,475). In the years ended on December 31, 2005 and 2004, the realized revaluation reserve amounts were R$ 89,449 and R$ 104,500.


(h) Totally depreciated assets

On December 31, 2005 the gross accounting value of the totally depreciated assets which are still in use is R$ 336,086 (2004 – R$ 307,078).


Concessions

(i) Intangible Assets

As of the fiscal year 1999, the negotiations related to the new concessions started to be performed considering the financial economic value of the business, defined in an appraisal report, issued by independent experts.

The amount defined in the respective contracting instrument, after the celebration of the deal together with the municipality, with the realization by means of underwriting stock of the Company or in cash, it is registered under this line item and amortized over the concession period, normally on a 30-year term.

The net disclosed amount refers to the assumption of the following municipalities:

Municipality	Cost	Accumulated Depreciation 2005	Net	Net 2004
Agudos	7,331	(1,619)	5,712	5,938
Bom Sucesso do Itararé	131	(13)	118	72
Campo Limpo Paulista	11,509	(2,356)	9,153	9,426
Conchas	2,171	(409)	1,762	1,804
Duartina	1,459	(227)	1,232	1,258
Estância de Serra Negra	11,423	(952)	10,471	10,755
Itapira	14,762	(838)	13,924	13,940
Itararé	5,508	(1,224)	4,284	4,428
Marabá Paulista	358	(66)	292	304
Miguelópolis	3,978	(939)	3,039	3,133
Osasco	260,013	(50,801)	209,212	214,311
Paraguaçu Paulista	13,966	(3,231)	10,735	11,163
Paulistânia	149	(22)	127	132
Sandovalina	211	(41)	170	177
Santa Maria da Serra	885	(185)	700	720
São Bernardo do Campo	237,459	(15,114)	222,345	230,297
Várzea Paulista	11,668	(2,426)	9,242	9,528
Total	582,981	(80,463)	502,518	517,386

(ii) Fixed Assets in operation

The fixed assets in operation represent the assets involved in the service providing of supply of water and collection of sewage in 352 municipalities. In the other municipalities, which were negotiated by financial economic appraisal, described in the item above, SABESP holds the possession of the assets. In the case of Sao Bernardo do Campo, the negotiation occurred in December, 2003 was based on a financial economic appraisal that arrived at the amount of R$ 415,471 and there was the transfer of services, as well as the ownership of the assets. In December, 2004 the property evaluation of the assets has been completed for the Municipality. The amount arrived at of R$ 175,858 was reclassified in December 31, 2004 from “intangible assets” to “operating assets”.

The concession contracts foresee that the assets shall be transferred to the conceding power at the end of the term.

In 2005, 17 (seventeen) concession contracts expired, being that 8 (eight) were extended for a period from 3 (three) months to 1 (one) year and 9 (nine) are under negotiation. The net accounting value of the fixed assets in the Municipalities where the concessions are under negotiation (2005) or that will expire in 2006, amount to R$ 1.57 billion.

In 2005, the depreciation costs of these municipalities were of R$ 84,641.

On December 31, there was no amount pending of payments to the municipalities.