SAO PAULO, July 21 (Reuters) - Banco Santander Brasil SA said on Tuesday it has launched a 5 billion reais ($963.58 million) credit line for new investments in the water and sewage sectors.

Santander Brasil's move comes as a new law passed in June is expected to prompt states and municipalities to privatize water and sewage companies and to universalize services in Brazil.

Brazil's government estimates that the sanitation sector will lure roughly 600 billion reais in investments in the coming years.

"Banks' loans for sanitation in Brazil are currently much lower than credit lines for energy and mobility projects," said Santander Brasil Vice President Jean Pierre Dupui. "We expect it to change."

Investors and companies with environmentl, social and governance, or ESG, certificates will pay lower interest rates in loans, the bank said, without disclosing how much cheaper lines may get. Santander's credit lines for sanitation project have maturities of up to 16 years. ($1 = 5.1890 reais) (Reporting by Carolina Mandl Editing by Chris Reese and Jonathan Oatis)