Brazil has agreed to triple its compensation to Paraguay to operate the Itaipu hydroelectric dam on their shared border, ending a decades-long dispute. The deal is seen as a victory for Paraguayan President Fernando Lugo (photo left).
AFP - Brazil agreed Saturday to triple its compensation to Paraguay to operate the huge Itaipu hydroelectric dam on their shared border, ending a decades-long dispute between the neighbors.
Asuncion also won the possibility to sell excess energy produced from the dam to the Brazilian market, but not to third countries, a Paraguayan demand that will be taken up in 2023.
The deal was a major victory for Paraguayan President Fernando Lugo, who swept into office in August after campaigning on promises to secure better terms for the energy sold from Itaipu. His election in April 2008 also ended a 61-year-old rule of the conservative Colorado Party.
"This is a historic agreement," Brazilian President Inacio Lula da Silva said at a ceremony at the Paraguayan presidential palace with Lugo, acknowledging that Brazil has a much faster pace of development than its small and largely rural neighbor.
The compromise, according to a joint statement, includes Brazil paying Paraguay 360 million dollars a year for power from the dam, up from 120 million today.
Saying the agreement was part of a Brazilian campaign to help boost economic growth in the region, Lula also pledged to fund several major infrastructure project in Paraguay through bank loans.
"Bigger countries have an obligation to help countries with smaller economies in order to boost their development, initiative and competitiveness capacity," Lula said.
Another 450 million dollars would go toward financing a transmission line 350 kilometers (217 miles) long from the dam to Asuncion to enable more widespread distribution of energy throughout the country at lower costs.
"In 10 months, thanks to the willingness of this administration and President Lula, we have advanced a claim that is 30 years old," said a visibly moved Lugo, hailing "a new of relations" between the two neighbors.
Lugo, a former Roman Catholic bishop, said Brazil would also support for the first time after long-standing disagreement, that both countries would be able to sell energy to third countries as of 2023.
Currently, energy from the dam can only be traded between the two countries, with Paraguay selling 95 percent of the energy produced to Brazil.
Date created : 2009-07-26