The investment will significantly boost potable water coverage in the capital.
The creation of the public enterprise for sanitation is still pending approval in congress.
The US$85mn project includes six raw water tanks with a combined capacity of 1.5Mm3.
The Santa Fe province plans to boost potable water production by 75% as part of a federal water drive.
Drought has forced Minas Gerais state water utility Copasa to implement water rationing in several cities.
São Paulo state government seeks to sell a 49% stake in the holding company that manages the water and sanitation utility.