Brazil and Paraguay Cancel Agreement Over Itaipu Energy Payments

RIO DE JANEIRO, BRAZIL – On Thursday, August 1st, Brazil and Paraguay canceled the energy pact signed in May by officials of the two countries, triggering a political crisis in the government of Paraguayan president Mario Abdo Benítez.

Subsequently, the Honor Colorado caucus, linked to former president Horacio Cartes, which is the president’s support base but was aligned with the proposal to hold a political trial that could result in impeachment, said it had changed its position.

The announcement was made by the president of the Paraguayan Chamber of Deputies, Pedro Alliana. As a result, the opposition’s opportunity to advance with the impeachment process is over, according to the Paraguayan press.

Brazil’s ambassador to Paraguay, Carlos Alberto Simas Magalhães, signed a document in Asunción in which the Brazilian government acknowledged the Paraguayan government’s decision to nullify the renegotiation that would have caused the neighboring country to pay more for energy from the bi-national power plant than it had previously paid.

Paraguayan Foreign Minister Antonio Rivas Palacios stressed that negotiations on the subject were back to square one.

Abdo gave a speech in Asunción conceding that there had been a mistake, soon after the revocation of the deal and the announcement by the Honor Colorado team that it would not support the impeachment process. He expressed his gratitude to the deputies who “saved” him.

Request for impeachment

Paraguay’s opposition parties had announced on Wednesday, July 31st, that they would submit a motion for impeachment against Abdo and vice president Hugo Velázquez over the scandal surrounding the controversial renegotiation.

The agreement would increase costs for Paraguay’s state-owned electricity company by more than US$200 million, according to the organization’s former director. The document, signed without being divulged to the public by the governments of Brazil and Paraguay, was unveiled only last week.