HomeRenewablesHydroelectricFeature: Paraguay and Brasil disagree over Itaipu output split

Feature: Paraguay and Brasil disagree over Itaipu output split

By the Potencia correspondent

For over a year the management of the Itaipu dam, jointly exercised by Paraguay and Brazil, has been controversial. The government of Paraguay is currently yielding to Brazil their energy surplus but now is considering stopping it. On the other hand, Brazil claims that the contract that regulates Itaipu Binacional commits Paraguay to yield their surplus.

Itaipu is the world’s second largest hydropower station and the one with the biggest energy producers.

The current agreement establishes that each country has the right to half of the energy produced. However, Paraguay is using just 10 per cent of the production so the remainder is being transferred to Brazil’s energy supply. Since 2011 the Brazilian government is paying $360m per year for that surplus, Efe news agency reported.

The present distribution of Itaipu’s generation is not enough to satisfy Paraguay’s power needs. Electric blackouts are usual in the country despite operating such big hydropower plant.

In August 2012, Paraguayan president Federico Franco said that the distribution of Itaipu’s generation “makes Sao Paulo completely in the light” while “Paraguay is in he dark”.

The chairman of Paraguay’s National Electricity Administration and Itaipu adviser Carlos Heisele said that Itaipu Binacional has a $13.9bn in debt, according to a report by Paraguayan newspaper ABC Color.

Paraguayan officials have said the financial managing of Itaipu is being done mainly by Brazilian staff since the project started in 1974. Paraguay has questioned the entity’s debt and they claim that their correspondent part is already satisfied. A research by American economist Jeffrey Sachs, who works as director of Earth Institute at the Columbia University, supports Paraguay’s position.

The team led by Sachs suggests the Itaipu debt be recalculated as their conclusions show that Brazil owes money to Paraguay. Brazilian daily Valor Economico added that the document proposes a revision of Itaipu Treaty and an audit made by the International Monetary Fund (IMF). Columbia University researchers Perrine Toledano and Nicolas Maennling, who collaborated with Sachs in the study, suggested this plan.

Valor Economico also interviewed Brazil’s Instituto Acende chairman Claudio Sales, who disagrees with Columbia University experts. From his point of view the debt calculation must be done considering a yearly rate of 5 per cent as the interest in the 1980s was 10 per cent. For this reason Sales thinks Columbia University team’s conclusions are incorrect.

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