Paraguay, Argentina Dispute Over Shared Hydroelectric Facility

Paraguay and Argentina share interests in the Yacyretá hydroelectric dam.

The tariffs for the power generated by the facility have now become an issue of contention, with Alfonso González Nuñez, head of the Paraguayan delegation at the Mercosur Parliament, Parlasur, insisting that Argentina improve the “reduced” price it currently pays for surplus power from the joint Yacyretá hydroelectric dam.

González Nuñez stated that Paraguayan president Fernando Lugo meet with Argentinean President Cristina Fernandez de Kirchner to resolve the issue, telling journalists, “We would like to see President Lugo strongly demand reliable and trustworthy replies (from President Kirchner) and formal indications that obligations are honored, and hopefully that he does not feel satisfied with rhetoric statements empty of content,” Mercosur press agency reported.

Terms governing the Yaciretá dam date back to 1973, and the contract signed then stipulates that the facility’s power output is shared equally between Argentina and Paraguay, but any surplus electricity can only be sold to the associate (in this case Argentina) at “a reduced cost agreed by the buyer and which is well below spot market rates.”

After extensive and convoluted negotiations Paraguay finally convinced Argentina to treble its annual payments for the surplus electricity from $120 million to $360 million.

By. Joao Peixe, Deputy Editor OilPrice.com