No.22 by Jocelyn Timperley
The Itaipu Dam: how Paraguay is negotiating its energy future
The terms of the Brazil-Paraguay treaty setting out the terms of the Itaipu dam is up for renegotiation in 2023. Image credit: Guilherme Artoff/ Flickr
Paraguay, a landlocked country to the north of Argentina, has just 800 confirmed cases of coronavirus. It has been praised for its strong response, but also has low levels of testing and has led to many Paraguayans going hungry.
Meanwhile Brazil, its neighbour to the west, has become the hardest hit country in Latin America, with total cases accelerating to nearly 250,000. "Brazil is perhaps today the place with the fastest expansion of the coronavirus in the world, and that is a great threat to our country,” said Paraguay’s president Mario Abdo Benítez earlier this month.
Paraguay is one of the countries John Oliver likes to mislabel (“That’s actually Paraguay, not Uruguay”) in his jokes about how little we think about certain countries. Yet the inward flow of infection from Brazil is far from the country’s only international challenge along its Parana river border.
The joint treaty which led to the development of Itaipu, the enormous hydroelectric dam built by Paraguay and Brazil decades ago, is soon up for renegotiation. This offers the chance to Paraguay the prospect of more cash from its share of the electricity, and, some hope, the opportunity for a greener future for Paraguay.
Itaipu is a fascinating example of a decades old energy decision that remains decidedly current. The joint treaty to build it to harness the world’s fast flowing falls was signed back in 1973, during the 35-year long dictatorship of Alfredo Stroessner. The dam began generating electricity in 1984.
It is still the world’s largest hydroelectric dam in terms of electricity production, with a record generation of 103,000 gigawatt hours in 2016. Some 35,000 people worked on its construction.
As one of the world's few binational dams, Itaipu’s 20 turbines are divided half and half on the Brazilian and Paraguayan sides.
“Because it's on a trans-boundary water source it's not just governed by the company's interests,” says Christine Folch, assistant professor of cultural anthropology at Duke University and author of Hydropolitics, a recent book on Itaipu. “It's also governed by political and international relations interests.”
Paraguay’s portion of the electricity of the dam is enough to power itself at least three times over. Under the terms of the current treaty, it exports most of its share to Brazil - at a rate well below the regional market rate. The treaty, however, set out a renegotiation process to be taken after 50 years - meaning an opening to change these conditions is coming up in 2023.
This has become a big deal in Paraguay. Fernando Lugo, the left-wing priest who served as president for four years from 2008, ran on a campaign promise to recover hydroelectric sovereignty.
“It was a financial tactic,” says Folch. “The idea was that by Paraguay recovering its sovereignty [...] it would wrest more resources from the dam. And those resources can then be applied to transforming the country socially.”
Lugo was deposed in an impeachment in 2012, restoring rule to the perpetually-in-power Colorado party (Strossner’s party, which stayed in power even after the dictatorship ended). However, the renegotiation remains a huge debate. The current president, Mario Abdo Benítez, last year faced the prospect of a possible impeachment after he signed a secret renegotiation agreement with Brazilian President Jair Bolsonaro on the dam - seen as unfavorable for Paraguay.
Clean energy surplus
Much of the debate around the renegotiation centres on how Paraguay could get a higher rate for the electricity it supplies to Brazil. But Folch argues there is something much more interesting available.
“What country on the planet has a massive surplus of carbon neutral green energy? That's already there, that doesn't have to be built?”
What if Paraguay instead launched an ambitious, out of the box, green revolution? says Folch. “A green industrialization, where you would know that the things that are being produced in the country are renewably sourced.”
Others are more sceptical. A friend of mine from Paraguay tells me people are unmindful on environmental issues, pointing out that in many places biomass and rubbish is still burned to get energy. “It takes more than a dam to make us green,” she says.
But Folch is not the only one excited about this possibility. In an interview with Folch last year Pedro Ferreira, former head of Paraguay’s public utility ANDE, outlined his “dream” of how Paraguay could both develop and become a zero emissions country even before Europe by electrifying its transport and industry.
“We could be an example of a small, middle income country that could have 100% clean energy,” he said. “We could have energy security for our young people, for all the generations that come after us. Paraguay can be an example of a country where, if we have sufficient help, we can achieve it.”