SAO PAULO, July 1 /PRNewswire-FirstCall/ -- Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP (NYSE: SBS; BM&FBovespa: SBSP3), (the 'Registrant') respectfully notifies the Securities and Exchange Commission that it will not be able to timely file its annual report on Form 20-F for the fiscal year ended December 31, 2008.

Since the end of first quarter of 2008, the Registrant and the State of Sao Paulo (the 'State'), the major shareholder of the Registrant, have been in discussions to settle the outstanding debt owed by the State to the Registrant in respect of supplemental retirement and pension benefits (the 'Benefits') that the Registrant paid from March 1986 up to December 2008 on behalf of the State to the former employees of the State-owned companies which merged to form the Registrant.

On November 17, 2008, the Registrant and the State entered into an agreement to settle the outstanding debt relating to the Benefits. Pursuant to the agreement, the State acknowledges a portion of the outstanding debt, in the amount of R$915.3 million as of December 31, 2008, which the State will pay the Registrant through (i) the transfer of certain reservoirs to the Registrant, with an aggregate value of R$696.3 million, and (ii) 114 successive monthly installments, in the aggregate amount of R$219.0 million, as adjusted by inflation, plus annual interest accruing at the rate of 6%, beginning in November 2008.

Despite the agreement, a portion of the outstanding debt owed by the State to the Registrant remains unsettled, totaling R$409.1 million (this amount does not include certain applicable adjustments) as of December 31, 2008 (the 'Unsettled Amount'), because of divergent interpretations between the Registrant and the Public Attorney's Office of the State of Sao Paulo (the 'Public Attorney's Office') relating to the calculation and eligibility criteria applicable to the Benefits.