Today, Brazil and Paraguay reached a significant agreement to adjust the electricity tariffs at the Itaipu Dam for the ensuing three years.
This pact concluded in Asunción, safeguards Brazilian consumers from tariff increases while redefining energy cost dynamics between the two nations.
Under President Lula da Silva, Brazil secured a deal to stabilize electricity rates at $19.28 per kilowatt until 2026.
This figure is below Paraguay‘s initial proposal but above previous rates.
This arrangement includes a financial mechanism where Itaipu Dam itself will offset the tariff increase by funneling the excess funds into a tariff moderation account.
This setup will channel an estimated R$ 300 million (approximately $58.82 million) annually to this account. It will total around R$ 900 million ($176.47 million) by the end of the arrangement.
Furthermore, the agreement sets the stage for negotiations concerning “Annex C,” which will redefine the financial terms post-2026. This anticipates the end of the dam’s construction debt payments.
This could enable Paraguay to sell excess energy on the competitive Brazilian market, potentially driving down prices through enhanced competition.
This strategic agreement not only ensures stable and affordable electricity prices for Brazilian consumers but also fosters a more competitive energy market for the future.
It underscores the commitment of both nations to long-term economic cooperation and efficient energy management.
This paves the way for broader regional energy market integration after 2026.