Brazil is expected to pay its South American neighbor, Paraguay, a bigger share of the energy it gets from the Itaipu dam on the Paraná River at the border of Brazil and Paraguay. The bill should increase to at least US$ 2 billion, said an energy expert and advisor to Paraguayan president elect Fernando Lugo.
"We would like to reach an agreement as soon as possible and we expect to collect at least US$ 2 billion" from electricity generated by South America's largest hydroelectric plant, Itaipu, jointly built with Brazil, said Ricardo Canese.
Paraguay is the region's only country with energy surplus and has been pushing for a review of agreements with its bigger neighbors.
Although there are conflicting views about how much Brazil currently pays Paraguay for energy generated in Itaipu, the sum is well beyond US$ 500 million.
Under contract clauses only Brazil and Paraguay are entitled to the Itaipu energy and any surplus can only be sold with Brazilian approval. Brazil argues that they paid for the bi-national dam and assumed all the risks and credits for the building of the gigantic plant. Virtually all the electricity generated is absorbed by energy hungry Brazil.
Paraguay has a similar agreement with Argentina although at a smaller scale in the Yaciretá dam, which was also built and financed by the larger country. Argentina takes most of the electricity generated in Yaciretá which is in the process of being expanded.
"The energy issue is unavoidable in any discussion nowadays, not only in Mercosur, in the Americas or in the planet. It can't be absent. We also want energy integration," president elect Lugo was quoted in the recent Brasilia summit for the creation of the Union of South American nations, Unasur.
Lugo revealed that Paraguay is currently holding talks with Brazil and Argentina to achieve "a fair price for our energy" from the Itaipu and Yaciretá dams. "However we agreed with President Lula to hold talks on the issue after I'm in office" next August, said Lugo.
The Paraguayan elect-president recently visited Mercosur members and announced his administration would be interested in increasing ties with the smaller countries of the region including selling them surplus energy.
"I think small countries in the region have much in common and also common possibilities if we continue to join forces and efforts," said Lugo who added he favored surfacing a regional development agreement of the seventies, which included Paraguay, Bolivia and Uruguay, "and possibly Chile."