Electricity bill: Itaipu tariff will rise – 03/16/2023 – Market
Itaipu’s tariff is going to be reviewed, and upwards, warns the new general director of Itaipu, Enio Verri. The value of US$ 16.19/Kw (R$ 85.62 per kilowatt) has been in effect since January 1 in Brazil, but was unilaterally fixed by the Bolsonarist administration, without consulting the Paraguayan partner. The rate agreed between the two countries last year was US$ 20.75/kW (R$ 109.73).
When the value was announced, as a positive inheritance from the past government, specialists in the area of energy already warned that the new government would have the political burden of increasing the tariff.
“The big issue is that Paraguay is unlikely to agree to lower it to US$16. The value is directly related to the country’s revenue, and they are in an electoral process, the situation is not the best for that,” said Verri in an interview with Sheet.
“Of course, my role as director general of Itaipu is to try, as much as possible, to find the cheapest rate possible for Brazil.”
Despite the fact that the energy produced by Itaipu is divided half and half between the two countries, Paraguay does not consume all of its share and, in the end, Brazilians in the South, Southeast and Midwest consume 85% of the energy distributed, with impacts on electricity bills in these regions.
Verri took office this Thursday (16th), in a prestigious ceremony attended by technicians from the sector, politicians and government representatives from both sides of the border, including presidents Luiz Inácio Lula da Silva (PT) and Mario Abdo Benítez.
Verri reinforced that the Itaipu council will be made up of a majority of ministers, as reported by the Sheet. According to him, on Tuesday, almost all the names were confirmed in a meeting with president Lula and ministers Alexandre Padilha, Rui Costa and Alexandre Silveira.
“I won’t say all the names, because the president asked to take a final look, but until yesterday [quarta] the council was formed 100% by ministers”, he said. “This choice seeks to show the importance of Itaipu in an important moment of negotiation.”
Starting this year, the representatives of Brazil and Paraguay at Itaipu will have the mission of participating in the renegotiation of the so-called Annex C of the bilateral treaty, which governs the financial structure of the company and the commercialization of the plant’s energy.
Negotiations should begin after the inauguration of the new president of Paraguay, which takes place in August. At the moment, the country is focused on the electoral campaign. One of the topics that will be discussed in the renegotiation is whether there will be changes in the way of calculating the hydroelectric tariff. Today the plant does not make a profit and the amount that goes to the electricity bill should only cover the binational’s expenses.
Verri says that the new directors are still being chosen, but confirms two names.
The Director of Coordination is headed by lawyer Carlos Carboni, former Chief of Staff of the Civil House when Gleisi Hoffmann was Minister. Luiz Fernando Delazari, former Secretary of Security for Paraná, also took over the Legal Board.
The new general director warns that he intends to review the management of the so-called socio-environmental mission of Itaipu.
Especially during the Bolsonarist government, resources under this heading grew exponentially to pay for works in the plant’s area of influence, which means all of Paraguay on the other side of the border and Paraná, in Brazil. The plant finances the new Brazil-Paraguay bridge, as well as roads and an airport runway, among other undertakings that are the responsibility of the State.
“The problem, in recent years, is that infrastructure projects have remained and investments in the socio-environmental issue have not been made, in the same proportion as before. It is not possible to say that this was bad, but it is not Itaipu’s mission”, Verri said.
“We are going to resume Itaipu’s mission, so there will be a reconfiguration in investments, where we will resume family farming, work with fishermen, the regional growth policy, always married to the government programs of President Lula, who was elected with the proposal to promote social policies,” he said.
“This does not mean that we are not going to do more works, but that the priorities are environmental and social projects.”
One of the goals, points out Verri, is to resume the works of Unila (Federal University of Latin American Integration), in Foz do Iguaçu, which are suspended. According to him, the university is an example of investment in infrastructure with potential social multiplier that meets the policy of the current government.
“The work has been stopped for so long that I don’t even know if we’re going to be able to take advantage of what’s there”, he says. “But Unila is a very important project for a country that defends regional integration. Today, in his inauguration speech, President Lula insisted that, working with Minister Camilo [Santana, da Educação]we resume the works.
Verri adds that he considers it “unlikely” to meet one of the demands of the Brazilian electricity sector: trying to release the binational’s energy on the free market during the revision of Annex C.
“Itaipu produces 8.5% of Brazil’s electricity and serves as a break-even point”, he says. “The free market fluctuates, and fluctuates a lot. Now, the price is down there, because we have plenty of rain, but when a drought arrives, as we had in 2021, it goes up there.”
Verri also explains that Itaipu needs to continue acting as a “fireman” for the national electrical system.
“When a tower falls, for example, and it is necessary to cut the energy in that region, Itaipu comes in to supply it”, he says. “So, Itaipu has a State role, a strategic performance, and there is no way to work according to the logic of the free market. It needs to follow the current logic.”