Brazil agreed to triple to about $360 million the amount it pays annually to Paraguay for electricity generated by the jointly owned Itaipu dam, ending a feud over which country benefits more from the world’s largest hydroelectric dam by output.
President Luiz Inacio Lula da Silva and his Paraguayan counterpart, Fernando Lugo, announced the “historic agreement” today in Asuncion, after months of stalled negotiations.
The pact also will allow Paraguay to bypass state- controlled utility Centrais Eletricas Brasileiras SA and sell directly its unused power in Brazil before the dam’s debt is to be repaid in 2023. A detailed timetable for Paraguay’s entry into Brazil’s energy market will be negotiated in the next three months.
Paraguay’s half-share of the dam’s $19 billion debt to Eletrobras and Brazil’s government wasn’t altered, as Lugo had been lobbying for since negotiations started about a year ago.
“It’s of no interest to Brazil that it develops, if our partners don’t also grow and develop,” Lula said in a speech following the signing of the agreement. “We bigger countries have the obligation to help smaller countries achieve a qualitative jump in their development and competitiveness.”
Lugo said he expected some groups in both countries will criticize their leaders for ceding too much in talks.
“We haven’t agreed on every point and there were differences,” he said. “But we’ve shown the political maturity to seek consensus and areas where we are in agreement.”