MercoPress. South Atlantic News Agency

Mercosur power integration is “absurd” without Paraguay

The dispute with Brazil over the Itaipú dam electricity ever so present

Mercosur asymmetries in power generation are overwhelming and almost absurd, with Paraguay the main power exporter in South America unable to dispose of its energy surplus, claimed Ricardo Canese, member of the Mercosur Parliament in representation of Paraguay.

Mr. Canese is also the coordinator of Paraguay’s negotiating team in the dispute with Brazil over the free disposal and price for the surplus power generated in Itaipú, South America’s largest hydroelectric dam shared by the two neighbouring countries..

“Any Mercosur power integration without Paraguay is absurd; 85% of all electricity power exports in South America originates in Paraguay which ironically can’t dispose of it freely”, said Canese during an energy forum in Asunción.

Canese recalls that the Asuncion Treaty, which gave birth to Mercosur, in its first article, states the free circulation of goods, services and productive factors.

“Of all the free circulation of goods and services, Mercosur excluded Paraguay’s hydroelectric energy from Itaipú and Yaciretá (shared with Argentina). If this is the main wealth and production of Paraguay, then what does integration mean for us?” asked Canese.

If a poor country like Paraguay can’t manage or dispose of its own resources, hydroelectricity, “we’re condemned to an underdevelopment vicious circle: an asymmetric process from its very inception”.

Canese argued that initial Mercosur rules were designed for the big corporations, and since Paraguay has none, “it was left out and discriminated”.

To make things even worse the only Paraguayan production, electricity, “can’t circulate freely”, because it’s Brazil that decides that.

He added that it is unsurprising that Paraguayan tomatoes, bananas, recapped tyres can’t cross the border to Brazil “simply because Mercosur was not designed for small undertakings. In effect I believe that Mercosur has further punished those small, medium companies”.

In the South American trade block asymmetries are abundant: “regarding size and population of its country members; different degree of economic development; entrepreneurship, GDP and per capita income and obviously different advances in areas such as education, science and technology”, underscored Canese.

Paraguay only absorbs 5% of its half share of power generated by Itaipú while the rest is sold under contract, dating back to the seventies and at prices from that time, to its partner Brazil.

President Lula da Silva administration argues that the difference helps compensate Paraguay’s debt from the construction of the major public work almost four decades ago.