The increased demand for energy from Paraguay will reduce the amounts that Brazil will be able to import from the production of the Itaipu plant.
According to the forecast of the Decennial Energy Plan (PDE), from 2023, Paraguayan demand for energy should grow at a rate of 5% per year, but the Brazilian electrical system is able to absorb this reduction in supply with ease, according to EPE information this Tuesday, May 14, at the first meeting of the series Dialogues on the Transition to Sustainable Development (Cebds), in Rio de Janeiro, which had the participation of the president of EPE, Thiago Barral.
“We are looking carefully at this issue of Itaipu. Paraguay has a preference for its share of energy and Brazil has a preference for buying what Paraguay does not consume. As Paraguayan consumption grows, the portion available for imports reduces”.
“In our assessment, this is easy to absorb. Given the size of the Brazilian market and scenarios of greater or lesser growth in demand in Paraguay, this difference is easily absorbed in energy auctions”, said Thiago Barral.
The Battle of Itaipu's Renegotiation
On May 10, the presidents of Brazil, Jair Bolsonaro, and Paraguay, Mario Abdo Benítez, laid the cornerstone of the new bridge that will link the two countries over the Paraná River. The act, held in the border town of Foz do Iguaçu, was a new demonstration of the good harmony between the two.
The new bridge will be the second binational and will cross the waters that feed the dam. The work seeks the development of the Triple Frontier, as the point that unites the two countries and Argentina is called. The project is over thirty years old. Bolsonaro and Abdo promised this Friday that it will be completed before 2022. The new binational ticket will be added to the Ponte da Amizade and will cost around 300 million reais. The money will come from Itaipu.
Both presidents have a tough challenge: negotiating the distribution of energy from Itaipu, the gigantic hydroelectric plant shared by both countries. According to the text, still in force, the smallest country, Paraguay, transfers surplus energy at cost price to the largest, Brazil. This agreement, which Paraguay considers unfair, expires in 2023, and the negotiation period coincides with the presidencies of Abdo Benítez and Bolsonaro.
Earlier this year, the federal government set up a working group that will be responsible for the Brazilian proposal in the negotiation with the so-called Annex C of the Itaipu Treaty that led to the construction of the plant, 46 years ago. The renegotiation of commercial conditions is foreseen, which will also take into account the end of the amortization of investments and the reduction in the price of energy produced by the bilateral plant.
Annex C provides for the new terms to come into force as of 2023. The current deadline for completing the work is next Friday, the 17th. In April, the government extended the group for another 30 days.
Itaipu Binacional has 14 GW of installed power and, in 2018, supplied 15% of all energy consumed in Brazil and 90% in Paraguay. In 2018, it produced 96,6 million MWh. Paraguay is entitled to half of the energy generated, but due to lack of demand, it consumes around 15% of its quota. The remainder is imported into Brazil.
