Brazil heralds Itaipu dam tariff agreement, Paraguay says deal not yet done

It is one of the world's largest hydroelectric dams. Brazil, which uses most of the electricity produced by Itaipu, had sought to lower the tariff while Paraguay proposed increasing the price of the surplus it sells back to Brazilian distributors.

Brazil's government announced on Tuesday a fresh deal with Paraguay regarding tariffs for electricity produced by their jointly-owned Itaipu hydroelectric power plant, but Paraguayan authorities said some details still needed to be ironed out. Brazil's Mines and Energy ministry said in a statement that under the new agreement, starting in 2026, Brazil would no longer pay Paraguay for extra costs related to the plant, only its operational costs.

Paraguay, meanwhile, would be allowed to directly sell excess power from the plant to Brazil and compete in the Brazilian market with local generators, which currently charge lower prices, the ministry said. Brazil's government said the move also would reduce average electricity prices for Brazilian consumers within 36 months.

Paraguay, however, said a deal was close but not yet done. "Paraguay and Brazil are playing on the same team, but we cannot celebrate until the match is over," Paraguayan Industry Minister Javier Gimenez told reporters, comparing the negotiations to a soccer game.

"We're in the 90th minute, very close (to a deal), but we're being cautious." In the last few months, talks between the countries had reached a deadlock over power generated by the plant on the Parana River. It is one of the world's largest hydroelectric dams.

Brazil, which uses most of the electricity produced by Itaipu, had sought to lower the tariff while Paraguay proposed increasing the price of the surplus it sells back to Brazilian distributors. The talks were aimed at revising part of a 1973 bilateral treaty governing the power plant, with discussions also involving the so-called Annex C that establishes some financial conditions of the agreement.

Brazilian President Luiz Inacio Lula da Silva and his counterpart Santiago Pena of Paraguay have met twice to agree to a new tariff and resolve the Annex C issue since Pena took office in August.

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