Brazil Refuses to Pay More for Paraguayan Energy Arguing Pacts Should Be Kept

Itaipu hydroelectric Brazil has offered investments in Paraguay in exchange for not claiming a fair price and free availability of the surplus energy produced at South America's largest hydroelectric dam Itaipu shared by the neighboring countries.

According to Paraguayan sources this is as far as Brazil was willing to advance following a top level meeting this week between Foreign Affairs minister Celso Amorim and the Paraguayan delegation headed by counterpart Alejandro Hamed Franco held at the Itamaraty Palace in Brasí­lia.

Since the new administration of President Fernando Lugo took office last year, Paraguay has been requesting Brazil improve the price of US$ 2.7 per megawatts/hour (agreed when Itaipu was built in the late seventies) and the free availability of non consumed surplus energy and which according to the original agreement must be sold to Brazil.

The Paraguayan delegation pointed out that the intention is not to modify the Itaipu Treaty to advance on these issues because they are well aware of the Brazilian Congress sensitivity about the issue given the recent experience with Bolivian President Evo Morales who nationalized the oil and gas industry (mostly under control of Petrobras).

However the Brazilian position seems to be that Paraguayan claims can only be achieved modifying the original Itaipu Treaty, to which Brazil is not in condition to abide. "Pacta sunt servanda" (agreements must be kept) was Brazil's Foreign minister Celso Amorim unmovable position during the two and a half hour meeting, according to Paraguayan sources.

Paraguay annually delivers 39 million MW of surplus energy (from its half share of Itaipu) to Brazil, for which it is paid an only price of US$ 2.7 per MW, totaling US$ 100 million. The sum does not include royalties, exploitation costs and Paraguay's share of building the dam.

Apparently Chile recently offered to pay Paraguay for the excess energy up to US$ 60 the MW and in the Brazilian domestic private market the price ranges from US$ 20 to US$ 22. But instead Brazil has offered to create "a special bi-national development fund to address Paraguay production activities and also respond to Brazilian interests."

Moreover Brazil is offering a special preferential credit line to promote Paraguay exports financed by Brazil's Development bank thus helping to confront the global financial crisis, according to Paraguayan sources.

Finally Brazil expects a reply to the proposals on writing in two weeks time when a new meeting will be scheduled probably for April, when President Lugo could visit Brasí­lia to close the deal with his Brazilian counterpart Luiz Inácio Lula da Silva.

Brazil is Latin America's largest energy starved economy while Paraguay is the smallest and weakest partner of Mercosur and one of the few countries in the world with surplus energy, precisely because of Itaipu.

Newsroom

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  • Show Comments (4)

  • usa_male

    Bro, you are acting as if your swiss corrupted nation is the real model of the so called “fairness treatment”..lol lol…shut the fuck up. Just like how the USA is fighting for itself, so does the Brazilians have the right to fight for itself. And even the lousy swiss.

  • ch.c.

    Brazil has offered investments in Paraguay in exchange for not claiming a fair price !
    That is the true face of Brazil : ONE WAY OR THE OTHER….. NOT PAYING THE FAIR MARKET PRICE ON WHAT THEY BUY !
    Same with Bolivian gas if you recall properly !!!

    Who is surprised ? Not me…for sure !

  • falupa

    Brazilian Energy
    @Forrest Allen Brown This is absolutely true. Why not help your own country. I am surprised that there is an argument over this. I am also disappointed that they are putting up with this. Paraguay is not in the wrong.

  • Forrest Allen Brown

    like brasil
    set the rules then demand more for nothing .

    i say paragua sell to any one you want you . as brasil will just stall in courts till the second coming .
    we all know brasil is 30 years from geting another nuk power on line am they keep talking about
    building more but never do as long as they can push around a smaller country to get enegry for almost free

    well why not help your own country .

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