Paraguay would accept “tariff reduction” for Itaipu dam held jointly with Brazil

RIO DE JANEIRO, BRAZIL – President of the National Electricity Administration (ANDE) Félix Sosa hinted that Paraguay “would accept to lower the tariff, but not by much.” To date, the government has not disclosed the country’s official position on this issue of paramount importance.

Neither has it yet informed what it intends to propose with respect to Itaipu’s budget, which will soon be approved and may imply a tariff reduction, which would be very convenient for Brazil.

“There are several alternatives, particularly if Paraguay proposes to increase its generation capacity, there are special funds for the development of the electricity sector for both countries and we have an infinite number of proposals,” said Tuesday the entity’s president.

He said that there are proposals from the Paraguayan side on the renegotiation of Annex C of the Itaipu Treaty, but that it also depends on Brazil’s proposals, based on which negotiators will take “one path or the other.”

He added that ANDE’s tariff is currently insufficient to make all the investments foreseen in the master plan, and that the water crisis is evidencing the need to increase investments over a 10-year period in distribution, transmission and power generation.

“By not having an adequate tariff to allow all these investments to be made, the same percentage of the tariff reduction in Itaipu will not necessarily be received by the end customer, but instead by the vulnerable sector. Paraguay will gain greatly in terms of service quality. It is not a total reduction (of the tariff), there must be a fund for the development of another type of generation,” Sosa added.

In 2023 Paraguay and Brazil must review Annex C of the Itaipu Treaty, which refers to the binational company’s financial bases and the provision of electricity services.