Brazil: with Lula, Itaipu will cost US$380 million more in the electricity bill

This month, an agreement reached between Brazil and Paraguay will generate an additional cost in the electricity bill of R$1.9 billion (US$380 million) to Brazilian consumers.

The amount is related to the new tariff of Itaipu, of approximately R$85 (US$16.82), which increased the operating expenses from just over R$5 billion in 2022 to R$7.6 billion this year.

Until 2021, operating expenses had been stable, at about R$3.8 billion per year.

Last year, the tariff agreement made by the government of former president Jair Bolsonaro represented an increase of R$1.3 billion in the exploration account.

Part of the resources was used to finance partnerships of regional interest.

With the agreement signed by Luiz Inácio Lula da Silva’s government, the exploration expenses doubled; with this, Brazilians will pay the amount on their electricity bill.

The expenses to maintain the plant are formed by a tripod that includes the debt incurred for the construction, the payment of royalties, and the exploration expenses.

However, at the end of February, Itaipu paid the last installment and settled the historical debt from the construction of the hydroelectric plant, which represented about 60% of the plant’s costs.

As the treaty established that Itaipu could not make a profit, the expectation was that the end of the debt would reduce consumers’ tariffs.

However, part of the amount should be used to pay for socio-environmental programs and construction work (included in the operating cost), essentially canceling the reduction in tariffs due to the end of the debt.

Since it is a binational plant, another dollar must go to Paraguay for every dollar spent in Brazil.

As most of Itaipu’s revenue is generated by the sale of energy in Brazil, Brazilians practically pay for the works in Paraguay and Paraná.

With information from Revista Oeste