Paraguay has clinched a groundbreaking $1.25 billion annual deal with Brazil over Itaipu Dam energy tariffs.
This agreement heralds a significant move toward energy sovereignty for Paraguay.
President Santiago Peña, of the Colorado Party, announced this milestone on May 9, 2024, emphasizing its historic significance.
The pact not only strengthens Paraguay’s economy but also achieves a long-standing ambition—direct energy sales to Brazil.
The new tariff, set at $19.28 per kW, represents a compromise between Paraguay’s initial $22.70 proposal and Brazil’s lower tariff preference.
This pricing, agreed upon for the next three years, protects consumers from price increases.
Additionally, Brazil will use the extra revenue to ensure tariff stability, thus preserving affordability.
The negotiation, led by President Peña and Minister Alexandre Silveira from Brazil, successfully brokered this nuanced agreement.
Despite Brazil’s endorsement, the deal has received mixed reviews from various energy stakeholders, reflecting its complex implications.
Furthermore, President Peña has signaled imminent negotiations on Annex C, expected to commence in 2024.
These discussions will seek to reduce tariffs progressively post-2025, corresponding with the end of debt payments for the dam’s construction.
This strategic approach is set to redefine Itaipu’s financial framework.
Revenue from this new arrangement will be allocated to crucial sectors in Paraguay, including education, healthcare, public safety, and infrastructure.
Investing in these essential areas underlines Paraguay’s commitment to fostering national development and improving citizens’ lives.
This pact not only fulfills one of Peña’s key campaign promises but also marks a significant departure from previous tariff-setting methods.