Brazil-Paraguay Summit Cannot Break Impasse Over Itaipu Hydroelectric

Presidents Lugo and Lula They could not reach agreement on proposed renegotiation of accords related to the Itaipu hydroelectric facility, so Brazil and Paraguay agreed to meet again in early June, according to Paraguay's Executive spokesperson Ruben Penayo.

The new summit will take place June 10 and 11 in Ciudad del Este, a border city of the neighboring countries, added the spokesperson from Brasí­lia at the end of the two day summit between Paraguayan president Fernando Lugo and his host and counterpart Brazilian leader Luiz Inácio Lula da Silva.

"Paraguay isn't retracting any of its demands," Lugo said in a statement upon his departure from the Brazilian capital Friday.

The Brazilian president tried to strike a more conciliatory tone: "I'm convinced that we can advance on this matter, which is sensitive for Brazil and for Paraguay," he said. "There is no theme that can't be discussed between us."

It was President Lugo's first official visit to Brazil since taking office last year. Several bilateral accords, in different fields that had been prepared for months and were to be signed by the presidents went unstamped.

On Thursday Lugo and Lula held a private meeting of an hour and were later joined by their negotiators and ministers. Talks lasted over three hours and "were concentrated on Paraguay's Itaipu claims; the other issues were mostly not even mentioned," said Paraguayan sources.

"We expect to arrive something more concrete, we are closer in some of the main points," admitted Paraguay's Foreign Affairs minister Hector Lacognata following the meeting. From the Brazilian side there were no comments about the canceling of the treaty signing ceremony and the two presidents' press conference.

Paraguay had previously proposed that Brazil forgive a portion of nearly US$ 18 billion in debt from the construction of Itaipu, as well as allow electric rate adjustments on energy from the facility and rights for Paraguay to sell electricity from the plant to third-party countries.

However Brazil refuses point blank to review the 1973 treaty and has offered to help finance up to US$ 1 billion in Paraguayan infrastructure projects through its BNDES National Development bank and double the amount of US$ 105 million paid annually on excess energy from the facility not used by Paraguay.

Brazilian officials point out that Paraguay currently receives US$ 600 million annually in energy from Itaipu and has received US$ 4 billion in royalties from the plant. Paraguay, however, has suggested it could take its debt renegotiation proposal to international courts if no accord is reached on the matter.

Itaipu, built jointly by Brazil and Paraguay in 1973, is the world's largest operational hydropower plans. It supplies all the power needed by Paraguay which is equivalent to 5% of Itaipu's potential and 20% of Brazil's needs. Surplus energy by contract can only be sold to Brazil.

Mercopress

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