Brazil-Paraguay Itaipu meeting amounts to nothing

President Luiz Inácio Lula da Silva pledged on Monday to rediscuss, “as quickly as possible,” tariffs for electricity produced by the Itaipu Dam, the massive hydroelectric complex shared by Brazil and Paraguay.

Speaking to reporters in Brazil’s Foreign Ministry after a meeting with Paraguay’s President Santiago Peña, Lula said that “we now have the conditions to use the resources from Itaipu to improve the quality of life for the people of Paraguay and Brazil, and at the same time enable new investments.”

Both presidents previously met in October to begin a review of the so-called Annex C, the part of the Itaipu bilateral agreement that establishes its financial rules, such as the conditions for energy supply, cost, and revenue of the electricity service.

The Itaipu Treaty, signed in 1973, defines that Brazil and Paraguay are entitled to an equal 50 percent share of the dam’s energy. It also forces Paraguay, a sparsely populated country with an energy demand dwarfed by Brazil’s, to sell the unused portion of its share exclusively to Brazil at the same price it pays. 

Enio Verri, head of the Brazilian side of Itaipu, told senators last year that Paraguay hopes to reverse a tariff cut in 2024 and that “opposing interests” were making negotiations between the two sides difficult.

“We [Brazilians] want a very low tariff because a low tariff is social inclusion,” Mr. Verri said at the time. “Paraguay wants the highest tariff possible, because this surplus is what enables Paraguay to make investments in its country.”

Lula added today that he never “accepted the idea of treating Paraguay as a small nation” — a possible reference to a statement by former Economy Minister Paulo Guedes, who in 2022 despisingly referred to Paraguay as “practically a Brazilian state.”

Mr. Penã said that Brazil is “Paraguay’s greatest partner” and that they had an “important” meeting. The presidents did not take questions from reporters.

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