The Brazilian Senate approved an agreement late Wednesday night to triple the amount Brazil pays for surplus electric energy from Paraguay's share of the joint Itaipu hydroelectric dam. Brazil’s annual payments jumped from $120 million to $360 million due to growing concerns that Paraguayan President Fernando Lugo could get a better price for its surplus energy from Argentina or Uruguay or on Brazil's unregulated energy market. Brazil’s state-controlled utility company, Eletrobras, will be responsible for payment.
Under the 1973 Itaipu Treaty, both countries have rights to 50 percent of the electric energy from the 14,000 megawatt dam—the second largest hydroelectric dam in the world. Yet Paraguay’s total population is only 3 percent that of Brazil’s and therefore sells 95 percent of its electricity share to its larger neighbor.
The agreement was originally proposed by former President Luiz Inácio Lula da Silva. It was approved by the lower House in April, and now that it has passed the Senate, it does not need President Dilma Rousseff’s signature to go into effect. Wednesday’s Senate vote comes two days after southern Chile’s Environmental Assessment Commission of Coyhaique approved the $3.2 billion HidroAysen hydroelectric project in the Patagonia region. Brazil also plans to develop the Belo Monte hydroelectric dam in the Amazon, costing between $11 billion and $17 billion.
To date, the Itaipu project has displaced over 10,000 families living beside the Paraná River and flooded the Guaíra Falls National Park. Chile’s HidroAysen is projected to flood 5,900 ha (14,580 acres) along the Baker and Pascua Rivers. Environmental groups claim that Belo Monte could displace up to 50,000 indigenous Brazilians. Despite controversy, all three projects represent a larger movement in Latin America to invest in renewable energy and lessen the regions dependence on oil and coal.