Itaipu's Annex C review faces deadlock due to political scenario

Political scenario impacts Itaipu negotiations

The energy outlook between Paraguay and Brazil was analyzed by engineer Pedro Ferreira, former president of the National Electricity Administration (ANDE) and former board member of Itaipu Binacional. According to information originally published by the newspaper ABC Color, the political calendar and the new configuration of the Brazilian Parliament leave a narrow margin for finalizing the review of the binational plant's treaty.

In May 2024, President Santiago Peña confirmed the tariff of US$ 19.28 per kW/month for the period between 2024 and 2026, with the expectation of concluding the Annex C document before the end of that year. However, the review remains pending.

Main points of the analysis

• The advance of lawmakers allied with Bolsonarism in the Brazilian Congress brings new approval requirements for international agreements.
• The hydroelectric plant's energy tariff tends to undergo future reductions, generating both positive and negative impacts for both nations.
• The increase in domestic consumption of energy generated by Itaipu on the Paraguayan side alters the weight of tariff discussions in the bilateral relationship.
• The presidential elections in Brazil head to a runoff between Lula and Flávio Bolsonaro, scheduled for October 25.

Impacts for the productive sector

For entrepreneurs and investors following the energy sector and infrastructure in the country, the uncertainty surrounding Annex C and the Itaipu tariff keeps the focus on the predictability of electricity costs in the medium and long term, although the increase in national consumption proportionally reduces the impact of historical tariff fluctuations.

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