PARAGUAY: Brazilian President Luiz Inacio Lula da Silva signs agreement to triple the amount Brazil pays Paraguay for energy from the massive Itaipu hydroelectric dam on their border

Record ID: 449735

  • Title: PARAGUAY: Brazilian President Luiz Inacio Lula da Silva signs agreement to triple the amount Brazil pays Paraguay for energy from the massive Itaipu hydroelectric dam on their border
  • Date: 26th July 2009
  • Summary: ASUNCION , PARAGUAY (JULY 25, 2009) (REUTERS) EXTERIOR OF GOVERNMENT PALACE BRAZILIAN AND PARAGUAYAN FLAGS VARIOUS OF PARAGUAYAN PRESIDENT FERNANDO LUGO WAITING FOR BRAZILIAN PRESIDENT LUIZ INACIO LULA DA SILVA TO ARRIVE VARIOUS OF LUGO RECEIVING LULA AT ENTRANCE OF GOVERNMENT PALACE SECURITY LUGO AND LULA ENTERING GOVERNMENT PALACE LUGO AND LULA SHAKING HANDS FOR PHOTOGRAPHERS AND MEDIA NEWS CONFERENCE WITH LULA AND LUGO (SOUNDBITE) (Spanish) BRAZILIAN PRESIDENT LUIZ INACIO LULA DA SILVA, SAYING: "Lugo, I am convinced that this is a historic agreement between us. What we cannot allow is for the ideologies of certain times to make agreements impossible or for one country to be the victim of another because a democratic country cannot fall in the face of another democratic country. NEWS CONFERENCE (SOUNDBITE) (Spanish) BRAZILIAN PRESIDENT LUIZ INACIO LULA DA SILVA, SAYING: "Brazil and Argentina, we now have responsibilities because we have bigger economies, because we have more industry and more technology and because we have a lot of things. As a result it is our role to contribute so that the smaller countries can have the same conditions that we have in our bilateral relations." LUGO AND LULA AT NEWS CONFERENCE (SOUNDBITE) (Spanish) PARAGUAYAN PRESIDENT FERNANDO LUGO, SAYING: "If it can. And this is our big conviction, which is that this can happen and that this historic agreement between Paraguay and Brazil, remains for 60 days, in 90 days we will meet and and go over this agenda. To see the difficulties that we have had, and as you say, we have moved up a step and we have improved our relations and above all, are co-operations." ****CONTAINS FLASH PHOTOGRAPHY**** VARIOUS OF LULA AND LUGO SIGNING AGREEMENTS
  • Embargoed: 10th August 2009 13:00
  • Keywords:
  • Location: Paraguay
  • Country: Paraguay
  • Topics: International Relations,Energy
  • Reuters ID: LVA19Y5AJSA017AAEHTIXD390AV8
  • Story Text: Brazil agreed on Saturday (July 25) to triple the amount it pays Paraguay for energy from the massive Itaipu hydroelectric dam on their border, ending a long-running dispute that had soured relations between the two neighbours.
    Paraguay also won the right to gradually sell excess energy from the dam directly to the Brazilian market instead of doing so exclusively through state-owned power utility Eletrobras.
    That move will allow Paraguay to fetch more for the power at market prices.
    The deal is a much-needed political victory for Paraguayan President Fernando Lugo, whose first year in office has been marked by a severe economic downturn and scandals over revelations he fathered children when he was a Roman Catholic bishop.
    But the agreement is likely to face criticism in Brazil, where opposition leaders and even some government allies have urged President Luiz Inacio Lula da Silva to play tough with Paraguay.
    "I am convinced that this is a historic agreement between us. What we cannot allow is for the ideologies of certain times to make agreements impossible or for one country to be the victim of another because a democratic country cannot fall in the face of another democratic country," Lula said at a ceremony with Lugo at the presidential palace in Asuncion, Paraguay's capital.
    Lugo swept into office in August last year after promising to extract better terms from Brazil over the energy it sells from Itaipu. His victory ended a 60-year stronghold on power by Paraguay's conservative Colorado Party.
    Lula said the agreement is part of a campaign by Brazil to spur economic development in the region.
    "Brazil Brazil and Argentina, we now have responsibilities because we have bigger economies, because we have more industry and more technology and because we have a lot of things. As a result it is our role to contribute so that the smaller countries can have the same conditions that we have in our bilateral relations," said Lula.
    Lugo had initially pushed to renegotiate the 1973 treaty that laid the foundations for Itaipu, which straddles their border along the Parana River. But Brazil pushed for a compromise that would allow Paraguay to boost its take from the dam.
    Lugo said the deal would usher in a new era of relations between the two countries based on cooperation instead of recriminations over who benefits most from Itaipu.
    "This is our big conviction, which is that this can happen and that this historic agreement between Paraguay and Brazil, remains for 60 days, in 90 days we will meet and and go over this agenda. To see the difficulties that we have had, and as you say, we have moved up a step and we have improved our relations and above all, are cooperations," said Lugo.
    Brazil gets close to 20 percent of its energy from Itaipu, paying Paraguay about $120 million a year, an amount that will now triple. Each country owns half of the 14,000 megawatts the dam produces annually, but Paraguay consumes just 5 percent of that amount and sells the rest of its share to Eletrobras for $45 per megawatt hour.
    Paraguay will eventually be allowed to sell a growing share of that excess energy directly to the Brazilian power market, where it could fetch as much as $65 per megawatt hour under current market prices.
    The deal gave negotiators 60 days to work out a timeline and the terms at which that excess energy will be sold on the Brazilian market. It also stipulated that Brazil and Paraguay could begin selling excess power from Itaipu to other countries in 2023, when the Itaipu treaty expires.
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