MercoPress. South Atlantic News Agency

Energy topped Lula's controversial visit to Paraguay

Bi-national Itaipu hydro plant

Brazilian president Lula da Silva one day visit to Paraguay to sign several bilateral agreements and officially inaugurate the expanded capacity of the huge bi-national Itaipu dam along the Parana river was signaled by strong criticism from the local press.

Criticism is focused on Brazil's negative to redraft the agreement regulating the Itaipu dam 20 turbines production shared by both countries. According to the decades old agreement Paraguay must sell to Brazil, at below market prices, all the surplus energy it does not consume which is almost 93% of its half share. Paraguay's main daily ABC Color in its main Monday editorial described Brazil as "an imperial neighbor and exploiter", and called for a renegotiation of the contract. "We must work out a new political consensus to begin reviewing the terms of the agreement signed in 1973" said Paraguayan president Nicanor Duarte during a joint press conference in the capital Asunción. Lula da Silva said there are "no banned issues to discussion in the treaty", and proposed Brazilian loans and investments to help develop Paraguay's economy and thus use more of the Itaipu generated energy. Part of the investments would be in the bio-fuels sector, an issue which according to the Brazilian press dominated most of the talks at the presidential summit. "I'm leaving Paraguay with great optimism because of the country's potential in ethanol and bio-diesel is extraordinary", remarked Lula da Silva. President Duarte said that "if Brazil is to become the Saudi Arabia of bio-fuels, why can't Paraguay become the Kuwait of the XXI century?" This was President Lula da Silva's first official visit to Paraguay since 2003. On Monday afternoon both presidents inaugurated the 20th - and final - generating unit at the bi-national Itaipu hydro plant. This means the total installed capacity of the scheme on the Parana River is now 14GW. Since 1991 the Itaipu has been operating with 18 units each, and in September 2006 the 19th unit went into commercial operation. With the inauguration of the 20th unit by Lula da Silva and Nicanor Duarte the project has achieved the planned capacity envisaged when the project was conceived decades ago. In 2006, Itaipu produced almost 92,700GWh, and over the last five years produced an average of 90,000GWh. With 20 units in place, the plant should be able to average 95,000GWh. Until the recent work to install the last two units, the plant generally operated with 16 out of 18 units. It is expected that the scheme will typically operate in future with 18 units running. But the much praised capacity expansion also involves discussions with Argentina. Itaipú Legal Department Director Jose Bonifacio Cabral Junior present at the ceremony revealed that Brazil and Paraguay are negotiating with Argentina the full advantage of the enlarged installed capacity of the hydro dam. The original 1973 agreement included Argentina, since it also shares the Parana River further down, and as part of the deal it was then agreed to build a second bi-national dam, to be shared by Paraguay and Argentina, the Corpus plant, as a form of ensuring a sufficient volume of water. The additional capacity means Itaipu will be operating with 18 turbines simultaneously, instead of the normal 16, and a complicated equilibrium of water flows down river must be agreed with Argentina as to make the whole fluvial system sustainable.