Itaipu: Brazil Offers US$ 200 Million, Paraguay Wants US$ 1.8 Billion

Itaipu The government of Paraguay, which is a poor country, is fighting for a fair market price for its share of energy generated at Itaipu, South America's largest hydroelectric dam shared with Brazil. "Somehow we are subsidizing Brazil's energy", said Paraguayan president Fernando Lugo in an interview with the Spanish daily El Mundo.

Lugo said that Paraguay's aspiration (one of Mercosur junior members) is to multiply by 16 the annual US$ 109 million received from Brazil for the Itaipu energy.

"Brazil has offered US$ 200 million but we expect anywhere between 1.2 and 1.8 billion US dollars" insisted President Lugo. "We would like a fair market price, we're a poor country, and we need the resources".

The energy from the gigantic Itaipu dam built in the seventies is virtually all absorbed by Brazil, with only 5% going to Paraguay. The other 95% is consumed by energy short Brazil which has a purchase priority and insists in paying prices agreed at the time the project was built.

"If necessary we'll take the issue to wherever necessary, although first we must exhaust all the bilateral mechanisms," said Lugo to El Mundo in direct reference to several bilateral committees addressing the dispute.

Lugo revealed that when his last meeting with Brazilian President Luiz Inácio Lula da Silva he put a one year timetable to reach an agreement, supported by both sides, on Itaipu.

"Since then we have advanced on investigations into past irregularities. Currently most of the energy is sent directly to Brazil, we are not even sure how much energy. We need a fair price and the free availability of energy so we can re-route if there's no agreement with Brazil," pointed out Lugo.

A fair price for the Itaipu energy was one of the former Catholic bishop electoral promises on taking office six months ago. A similar situation occurs with a smaller hydroelectric dam shared with Argentina, Yaciretá.

Regarding his six months in office the president admitted that "we still see indigenous people in the street in miserable conditions, landless peasants and homeless", but the "state can't provide for all, there are simply not enough resources."

"I went into politics not to cheat on people or to become a demagogue," said Lugo who admitted that 40% of Paraguayans live below the poverty line and another 20% in conditions of indigence.

"We are hopeful that with international support we can bring down those appalling numbers," said Lugo.

As to his religious background Lugo confessed it was hard to abandon the church for politics, "but the church is one of the most trusted institutions in Paraguay."

Mercopress

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