The new Brazilian general director of Itaipu Binacional (IB), Enio Verri, stated in an interview with Folha de São Paulo that the South American giant will review the entity’s rate applied by Brazil since this year, and that it was decided by former president Jair Bolsonaro. Verri stated that the fee will be reviewed and raised.
The value of US$ 16.19 kW/month has been in force since January 1 in Brazil, but was set unilaterally by the Bolsonaro administration, without consulting Paraguay. The rate agreed upon last year, after eight months of negotiations, was US$20.75 kW/month.
“The big issue is that Paraguay will hardly agree to lower it to US$16. The value is directly related to the country’s income, and they are in an electoral process, the situation is not the best for that,” Verri told Folha.
In fact, Paraguay seeks to maintain the numbers in Itaipu, although Annex C establishes that the rate must go down as a consequence of the amortization of Itaipu’s debt, which is settled. Indeed, last year the financial commitments were lower, so the rate suffered a reduction, going from US$ 22.60 kW/month to the final US$ 20.75 kW/month.
“Of course, my role as Itaipu’s general director is to try as much as possible to find the cheapest rate possible for Brazil,” Verri said, however.
It happens that although it is established that the energy produced by Itaipu is divided half and half between the two countries, Paraguay does not consume all its part and in the end Brazil takes advantage of 85% of the production, so a lower rate represents more benefit for the neighboring country than for Paraguay.
Annex C
In addition, in the note with Folha, Verri reinforced that the Itaipu council, on the Brazilian side, will be made up of a majority of ministers. According to him, on Tuesday almost all the names were confirmed in a meeting with President Lula and the ministers Alexandre Padilha, Rui Costa and Alexandre Silveira.
“I am not going to say all the names because the president asked to do a last review, but until yesterday (Wednesday) the council was made up 100% of ministers,” he said. “This election seeks to show the importance of Itaipu at an important moment of negotiation”, added the director of the IB.
It happens that this year, Brazil and Paraguay will have to start the mandatory revision of Annex C of the bilateral treaty that precisely governs the financial structure of the company and the commercialization of the power of the plant.