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Itaipú Agreement Nears End, Paraguay Faces Potential Energy Price Hikes
🇵🇾 Paraguay /Economy & Trade

Itaipú Agreement Nears End, Paraguay Faces Potential Energy Price Hikes

From ABC Color · (1d ago) Spanish Critical tone

Translated from Spanish, summarized and contextualized by DistantNews.

TLDR

  • Paraguay's preferential access to surplus energy from the Itaipú Binacional dam, valued at approximately US$200 million annually, will end on December 31, 2026.
  • The current "Operational Agreement" from 2007, which allowed the national electricity company (ANDE) to use this surplus energy to stabilize generation costs, will expire.
  • The expiration means ANDE will have to contract energy under new terms and could face significant cost increases for consumers starting in 2027.

Paraguay faces a critical juncture as the "Operational Agreement" governing its access to Itaipú Binacional energy expires at the end of 2026. This agreement, a cornerstone of the national electricity sector's financial stability for years, has provided Paraguay with approximately US$200 million annually by allowing the state-owned ANDE to utilize surplus energy from the dam at significantly lower costs than contracted power.

The "Understanding between Paraguay and Brazil on directives related to Itaipú Binacional energy," signed in April 2024, confirmed the agreement's validity only until the end of 2026. While initially presented by the government as a diplomatic achievement to extend the agreement, which had technically expired in late 2023, the reality is that Paraguay will lose a substantial financial benefit. This loss could translate into a significant "tarifazo" or price hike for ANDE customers.

Brazil and Paraguay accept to maintain the validity of the terms of the 2007 operational agreement for this period (2024-2026).

— Entendimiento entre el Paraguay y el Brasil sobre directivas relacionadas con la energía de Itaipú BinacionalThis quote from the binational understanding document confirms the extension of the operational agreement until the end of 2026.

ANDE President Ing. Félix Sosa has previously highlighted the importance of this agreement, noting that its absence would necessitate a tariff adjustment. The current system allows for a favorable generation cost mix, as seen in 2025 with an average of US$26.39 per MWh. Without this preferential access to surplus energy, ANDE's generation costs are expected to rise, directly impacting the affordability of electricity for Paraguayan households and businesses. The expiration marks a turning point, potentially forcing a renegotiation of energy contracts and a reevaluation of Paraguay's energy strategy.

that amount is cause for celebration by ANDE and the country, because if it didn't happen, the tariff (of ANDE) would have to be adjusted upwards for customers.

— Ing. Félix SosaThe President of ANDE explains the financial significance of the operational agreement, highlighting its role in preventing tariff increases.
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Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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