All It’s Missing Is Congress Approval for Paraguay to Get Brazil’s Money

Itaipu hydroelectric By an ample majority, the Paraguayan Senate approved an agreement with Brazil which will give Paraguay a higher financial compensation from Itaipu, the world's largest operational hydroelectric dam. The question has been a decades-long standing claim which was addressed in several summits between Brazilian president Luiz InΓ‘cio Lula da Silva and his Paraguayan counterpart Fernando Lugo.

The agreement was finally reached last July in AsunciΓ³n and now must be approved by the Brazilian congress before it becomes effective. According to the new conditions Brazil will pay Paraguay US$ 360 million (three times the current figure) for its share of surplus energy from the Itaipu dam, which is totally absorbed by Brazil under a standing contract clause.

As part of the deal Brazil is also committed to finance major power lines and transport infrastructure connecting Itaipu with Asuncion to the tune of US$ 450 million and in a near future Paraguay will be able to sell part of its surplus power in the Brazilian spot market. Currently it is all purchased by a Brazilian government public utility company.

A Paraguayan Brazilian committee will be in charge of working out the details for the transition from an only client to the spot market and eventually to third countries.

Itaipu the world's largest operational hydroelectric dam jointly managed by the two neighboring countries has long been a source of irritation for Paraguay.

Brazil insists in paying for the surplus energy prices from the seventies, when the dam was built, and under contract clauses can only be traded among partners. Since Paraguay only uses 5% of its half the rest is sold to Latin America's largest economy.

Brazil claims Paraguay never paid its share of the construction costs and therefore has a huge debt from then which it must address.

For the industrial hub of Brazil, metropolitan Sao Paulo, cheap power from Paraguay and cheap natural gas from landlocked Bolivia have been a significant factor in their costs' equation.



  • Show Comments (5)

  • Arnold

    Yes the Brazilian government needs to stop being greedy… but just explain something to me:

    How would Paraguay nationalize the damn which already belongs to its government? How would Paraguay stop giving any power to Brazil if 50% of the damn belongs to Brazil ?

  • the_guy

    Yeah good call the_male… IDIOT.. Brasil great place, wonderful people but they are still thiefs… Granted Paraguay doesn’t have the power to invade but they could nationalize the damn and not give any of the power to brasil which in end would send their economic center of Sao Paulo into crisis…. So yeah… Viva Paraguay

  • Bambu

    That’s right !
    [quote] if that was the case, there’s the problem they are landlocked. They would have to ask permission from France and Germany to get their ridiculous army out of the country. [/quote]

    Apart from Switzerland doesn’t have many people for an army, unless they included their milky cows ?

    It would be much easier for Monaco to have an army than Switzerland, as Monaco could easily get their soldiers into Battlefield. Swiss soldiers would have to get visas first before reaching the enemy.

  • Arnold

    Oh wait, they will call the swiss army to invade Brazil Do the swiss have an army?
    Switzerland doens’t have an army too small for that..

    Even if they had, it would have to be composed of women and children too in order to make some sort of big number.

    And.. if that was the case, there’s the problem they are landlocked. They would have to ask permission from France and Germany to get their ridiculous army out of the country.

    Now you can ask yourself, Why are they so neutral ? πŸ˜‰

  • USA_Male

    Good job Brazil, why pay more if you can get it cheap. Besides what is Paraguay going to do? Invade? lol.
    Oh wait, they will call the swiss army to invade Brazil Do the swiss have an army?

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