Lula meets with the president of Paraguay and discusses energy from Itaipu

President Luiz Inácio Lula da Silva received, this Monday (15), the president of Paraguay, Santiago Peña, to discuss topics such as the Itaipu Binacional plant, infrastructure and Mercosur.

Lula and Peña stated that they intend to find a joint solution to the differences between the two countries regarding the tariff charged for energy produced at the Itaipu plant.

“I am very interested in this [revisão do acordo] be done as quickly as possible and that we can work to present — both to Paraguay and Brazil — a definitive solution for new relations between Paraguay and Brazil in the management of the important company Itaipu”, said Lula, in the first meeting between the presidents in Brasilia.

The meeting took place at the Itamaraty Palace and brought together the Ministers of Finance and Foreign Affairs, Fernando Haddad and Mauro Vieira.

The tariff for the Itaipu hydroelectric plant is decided annually and serves as the basis for covering the Unitary Cost of Electricity Services (Cuse) expenses. Affiliated with the Colorado party, Peña assumed the Presidency in August last year defending the use of the plant to boost investments in the country.

On the other hand, the Brazilian government defends the maintenance or reduction of the value, since the treaty determines that the plant was not designed to generate profit. The energy tariff corresponds to the sum of the debt payment and the expenses for maintaining the plant, in the so-called Electricity Service Costs (Cuse).

“I told my partner that we are going to re-discuss the issue of Itaipu’s tariffs. We have a difference in the tariff, but we are willing to find a solution together and, in the next few days, we will hold a meeting again”, stated the head of the Brazilian Executive.

Currently, the tariff is provisionally set at US$16.71 per kilowatt (kW). Paraguay has always shown dissatisfaction with the tariff and claims that the value of the energy it exports to Brazil is low and that it wants to increase the value, as it uses a large part of the resources to promote a series of public works and policies.

Any tariff change, however, would have a direct impact on the electricity bill of 131 million Brazilians.

The impasse led the neighboring country to adopt an extreme measure, blocking the mega plant’s budget for the year 2024. As a result, both employees, service providers and suppliers of the binational hydroelectric plant face delays in payments in early January, on both sides of the border.

Peña assumed rotating command of Mercosur, after Lula’s presidency in the regional bloc. The Paraguayan was in Guatemala, where he was attending the inauguration of new president Bernardo Arévalo.

“I told President Santiago Peña that he is not the one who has to come to Brazil, it is Brazil that has to go to Asunción so that we can continue negotiations to find a definitive solution”, he declared.