Itaipu power plant contract under debate

Brazil’s Ministry of Mines and Energy has put together a work group to spearhead studies on the revision of the treaty of the Itaipu Binacional hydroelectric plant, on the Paraná river, on the Brazil–Paraguay border. According to official information, the group will be formed by ministry officials, and will be given 60 days to devise a plan outlining the necessary stages for the conclusion of the studies.

The group coordinator will be allowed to invite specialists from other agencies and organizations and representatives from society and associations to attend meetings and join in the work.

Activities will focus on the financial aspect of the deal. Signed in 1973, it stipulates a revision in 2023 of the selling values of the energy produced by the plant.

Brazil–Paraguay

Both Brazil and Paraguay have the right to 50 percent of the energy produced, but part of the electricity allocated for the neighboring country is sold to Brazil. The discussion is also expected to cover the tariff and the possibility of selling energy to any buyer, not just to Brazil and Paraguay. After 2023, a new revision is not slated until 2017.

The energy sold to Brazil serves clients in the country’s South and Southeast regions. Lowering the amount offered to Brazil or increasing the price of imported energy could impact the tariff charged in the country.

Itaipu’s tariff is cost-based, with two thirds stemming from the payment of the nearly $27 billion debt, incurred following the plant’s construction. The debt is expected to be cleared by 2023. Should conditions remain as they are, each country will have $1 billion available for direct investment.

The Itaipu Binacional hydroelectric power plant is the world’s top producer of clean, renewable energy, with 20 energy generation units and 14 thousand MW of installed power. Today, Itaipu accounts for 17 percent of Brazil’s electricity market and 85 percent of Paraguay’s.