Itaipu Treaty: Paraguay received only US$4.11/MWh from Brazil

RIO DE JANEIRO, BRAZIL – On April 26, 1973, in Brasilia, the Itaipu Treaty was signed in the presence of military dictators Alfredo Stroessner and Emilio Garrastazu Médici. Today, 49 years later, it is known that of the energy produced by the “work of the 20th century” in 38 years, Paraguay, despite its condition of co-owner, was able to use only 8.7%; 17.4% of the half that belongs to it, and was paid only US$ 4.11/MWh.

Even though the Treaty was signed 49 years ago by the then Chancellors of Paraguay and Brazil, Raúl Sapena Pastor and Mario Gibson Barboza, its Art. I states that its purpose is the “… hydroelectric use of the hydraulic resources of the Paraná River, belonging in a condominium to both countries…” and in Art. III “equality of rights and obligations”, the average rate of Brazilian use of Itaipu’s accumulated generation was around 91.3%.

Furthermore, if Art. XIII of the bilateral document establishes that the energy produced by the power plant “… shall be divided equally between the two countries…”, a comparison of the figures obtained from the notes of the binational entity and Paraguay’s National Electricity Administration (ANDE) reveals that this right was not respected by the current administrations of our country either.

According to Paraguay’s calculations, of the 1,422,869.5 GWh, which according to the treaty belonged to Paraguay – 50% of the 2,845,739 GWh, the accumulated generation in 38 years – ANDE was able to take advantage of 247,824 GWh, that is, only 17.4%, while the overwhelming 82.6% missing was ceded to its partner Eletrobras.

ACQUISITION DOWNGRADED TO ASSIGNMENT

The data collection also revealed that the accumulated compensation for the transfer of energy between 1989 (the year of the first remittances from and through the binational entity, corresponding to the Paraguayan benefits) and March of this year amounted to US$4.8 billion.

Article XIII of the Treaty from its third line states that each country has “the right to acquire energy not used by the other country for its own consumption”. From the beginning, it was clear, even to the “ordinary citizen,” that the “other country” was Paraguay.

The experience accumulated in the 38 years of production, contracting, cession, “compensation”, etc., in Itaipu proves that there was no acquisition, at least if this noun should be understood as “purchase”, because already in April 1973, Art. XV-3° in the treaty, this operation is named as it is: “… to compensate the High Contracting Party that cedes its energy to the other”, with the suspicious imposition/concession that the corresponding amounts should be included in the service cost of the binational company. The imposition/concession was amended on January 28, 1986, thanks to the combined pressure of union, student, and political forces.

US$4.11/MWH

The amount required for the payment of “compensation” was also established in 1973, Annex C, III.8, then US$0.30/MWh.

The value, whose adoption criteria were never clarified, was updated in several stages (1986/1992), 2005, and, finally, 2011, the year in which the modifications obtained by the government of Fernando Lugo came into force.

What is real and concrete is that the average value paid by Brazil to Paraguay during the generation period of the hydroelectric power plant, up to March 31 of this year, is US$4.11/MWh, obviously over the cost of Itaipu, which also has its particularities, because the energy “associated” to the guaranteed power has a cost and that obtained from the additional one has another, which lowers the tariff of the binational. In the regional market, in October 2020 and November 2021, the average price per MWh was around US$177/MWh.

ONLY 8.7%

Paraguay’s average utilization rate of Itaipu’s total production in its 38 years of generation is only 8.7% (247,824 GWh) (1 GWh = 1000 MWh), while the Brazilian rate corresponds to the missing 91.3% (2,597,915 GWh).

Of the energy that made up the Paraguayan part in almost four decades (half, according to the Itaipu Treaty) (1,422,869 GWh), the local utilization in the system of ANDE was 17.4%, while the Cession was 82.6% (1,175,045 GWh).