MercoPress. South Atlantic News Agency

Lula da Silva Confirms Paraguay the Promised Power Line and Bridge

The Itaipu dam rich in energy at the heart of the discussions

President Lula da Silva reassured Paraguay that Brazil will build the promised 500 kW power transmission line from the Itaipú dam to the capital Asunción, as well as a bridge over the Paraná River shared by both countries.

Brazil's President Lula da Silva and Paraguayan counterpart Fernando Lugo met on Monday in a military barrack in the Brazilian border town of Punta Porá to discuss pending issues from the agreement reached last July which was supposed to review the whole bilateral relation regarding Itaipú, the world’ second largest hydroelectric complex shared by both countries.

The July agreement is still pending congressional approval in Brazil and being an electoral year, Paraguayan lawmakers doubt it will be addressed in the current legislature, besides the fact some influential senators from the ruling coalition and the opposition are not totally convinced with what Lula da Silva agreed.

Last July—after months of discussions—Brazil agreed to pay a higher price for Paraguay’s surplus power from Itaipú. Not as much as President Lugo expected but the package was sweetened with the promise of the power line, a bridge and other infrastructure projects.

Under the terms of the Itaipú treaty the document can’t be reviewed until 2023 and power prices have remained virtually frozen since the seventies when the dam was built. Paraguay only consumes 5% of its 50% share and the rest is sold to Brazil’s government electricity distribution company.

Following Monday’s last meeting with Lugo, president Lula da Silva promised he would be visiting Paraguay twice before the end of December when his mandate will be up: once for the official launching of the power line construction, and a second for a similar ceremony when the founding stone of the Paraná bridge.

The original promise was for the power line and bridge to be built with funds approved and provided by Brazil. However the Lula da Silva administration is now looking for alternative financing given Congress’ attitude and a most possible solution could be the so called Mercosur Structural Funds precisely created to help with major works.

Lula da Silva also promised that Congress in the coming weeks would approve the July 2009 documents which increase payment for Paraguayan power from 120 to 360 million US dollars annually. This is a crucial issue for Lugo since it was part of his campaign promises and he desperately needs the funds for his programs to fight poverty and promote schooling.

However Lula da Silva was careful to point out that the “Brazilian congress is autonomous and “I respect that position”. Nevertheless “members of Congress are well aware of the issue and the documents that are waiting for consideration: they are most important for Brazil and for Paraguay”.

The issue is also highly sensitive in Paraguay and for Paraguayan public opinion who feel they have been skimmed for years by “imperialist” Brazil. “We don’t want handouts or generosity from Brazil; we only want what belongs to us” was the basic line from Asunción newspapers main editorials in anticipation of the presidential summit.