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Brazil director of Itaipu believes deal with Paraguay to be inked soon

Deadlock stems from the lack of a contract on the purchase of energy

Published in 23/08/2019 - 08:24

By José Romildo Foz do Iguaçu

Representatives from Brazil and Paraguay are holding talks to tackle the impasse arising from the lack of a contract on the purchase of energy from Itaipu by Ande—Paraguay’s state-controlled National Electricity Administration—and Eletrobras. For the first time since Itaipu Binacional became operational, in 1984, the firm has been unable to invoice.

Appointed some six months ago as Itaipu’s director-general on Brazil’s side, General Joaquim Silva e Luna talked about his administration this week, and said he expects both parties to reach an agreement soon. “The earlier this contract problem is solved, the earlier the financial issue will be settled.” Negotiations are taking place at technical level by Ande and Eletrobras and at political level between the foreign and energy ministries in both countries.

Despite the issues stemming from the lack of contract terms for energy purchase, General Silva e Luna said thus far the company has not failed to fulfill any of its commitment on royalties, contracts, partnerships, and funding for development, which are currently being paid for with resources from other financial transactions and with adjustments made to payment schedules.

“Of course the company will be affected if this continues on to the end of the year,” Silva e Luna said. He noted, however, that Brazil and Paraguay “are two sovereign countries, which co-exist in harmony and are willing to bolster confidence ties.” He believes the impasse will be addressed soon.

Not only does the solution ensure short-term payments, Silva e Luna argued, but also paves the way for a permanent solution by 2023, when the Itaipu Treaty turns 50 and when its Annex C, on finance, will be revised by Brazilians and Paraguayans. The revision includes updates on energy trade at Itaipu.

Management

After he took the helm of the Brazilian side of Itaipu, Silva e Luna said he started efforts to revamp the company based on austerity measures and respect for the principles of public administration.

The main changes brought into effect related to the use of the company’s resources. Funding and partnerships with no focus on the dam’s purpose were directed towards structural projects at Itaipu, like the construction of the Brazil–Paraguay integration bridge, already initiated and having investments estimated at $114.4 million. This project, the director said, will bring “a new economic cycle” to the border area.

Silva e Luna also mentioned the partnership with Brazil’s government agency for airports Infraero, whereby Itaipu Binacional agreed to invest $3.8 million in two improvement initiatives, one of which being the construction of a maneuvering area of over 19 thousand m², expected to expand the airstrip of the airport in Foz do Iguaçu by 40 percent.

Itaipu is the world’s top clean and renewable energy generator. The plant boasts 20 generation units and an instaled 14 thousand megawatts of power. In 2018, Itaipu accounted for the 15 percent of the energy feeding Brazil and 90 percent of Paraguay’s.

*Reporting on the scene at the request of Itaipu

Translation: Fabrício Ferreira Edition: Juliana Andrade / Nira Foster

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