Paraguay says an initial accord with Argentina on a debt relief plan for the jointly owned 3,200-MW Yacyreta hydroelectric project will slash the debt it owes to the Argentine treasury by US$6.2 billion.
The deal would allow the jointly owned operating company, Entidad Binacional Yacyreta, to finish projects aimed at increasing power production, Paraguayan Vice President Luis Castiglioni said November 8. There are plans to make the dam higher and expand production by 2009 to 20,000 gigawatt-hours from the current 12,000 GWh.
“Yacyreta’s debt will be reduced by more than US$6 billion due to the Argentine government’s recognition of unfair treatment in the last few decades,” Castiglioni told reporters.
Argentina will be repaid for the remaining debt, estimated at another US$6.2 billion, with power supplies estimated at 8,000 GWh per year for 42 years.
Groundwork for the agreement was laid in September in a meeting between Argentine President Nestor Kirchner and Paraguayan President Nicanor Duarte Frutos. (HNN 9/20/06)
Construction on Yacyreta, one of South America’s largest power projects, was financed by Argentina in the 1980s at a cost of about US$10 billion — or more than three times the original budget. Paraguay asked that the debt burden be reduced because it thought the interest was calculated unfairly.
Paraguay said the initial figures are part of a technical accord that must be approved by both countries’ legislatures and accepted by their presidents. Castiglioni said if no agreement were reached, Yacyreta’s debts would rise to about US$40 billion in the next 20 years.
“Instead of having an infinite debt within 20 years, we are going to have nearly zero debt,” Castiglioni said.
President Duarte said in November the re-election of Brazilian President Luiz Inacio Lula da Silva opens the way to renewed talks to renegotiate the debt of the 12,600-MW Itaipu hydroelectric project, operated jointly by Paraguay and Brazil on their common border. (HNN 11/7/06)
The Paraguayan government said Itaipu’s management company must pay 7 percent annual interest on its debt, indexed to inflation in the United States, beyond a tax of 5 percent. Duarte has said the interest rate agreement, which was adopted by previous governments, is a financial setback for Paraguay.