LatinNews Daily Report - 25 February 2014

ECONOMY| Demands for reviewing Yacyretá terms grow. On 24 February three Paraguayan former presidents - Raúl Cubas Grau (1998-1999), Luis Angel González Macchi (1999-2003) and Federico Franco (2012-2013)  - attended a special session of congress at which they presented evidence that they claimed shows that the country has been harmed by the current terms of the deal governing the bi-national Yacyretá hydroelectric dam that Paraguay shares with Argentina. The special session in congress comes as Paraguay and Argentina prepare to review the 40-year old treaty that created Yacyretá on 27 March. For years, Paraguay has complained that the terms of the treaty by which Paraguay agreed to re-pay Argentina for the loans it took out to build the hydroelectric plant and by which the partners are forced to sell any excess energy produced at the plant to each other at pre-set concessionary prices, is detrimental to the country. Argentina maintains that Paraguay still owes it some US$15bn for the construction of Yacyretá. However, recent Paraguayan governments have all rejected this figure, arguing that it should be much lower if Argentina were to accept the selling of Paraguay’s excess energy produced at Yacyretá as repayment. Paraguay sells the majority its Yacyretá energy back to Argentina to the point that 87% of all energy produced by Yacyerá is now consumed by Argentina. All three former presidents presented evidence that purportedly showed that if Argentina had accepted this repayment option and Paraguay had been allowed to sell its excess energy produced a Yacyretá at market prices, then Paraguay “would not owe a single cent” to Argentina. Paraguay is hoping to push this point with Argentina in the upcoming revision, but it can expect to find strong resistance from the Argentine government led by President Cristian Fernández, which is currently facing an economic crisis, and will not be in any way prepared to condone the debt or accept paying higher prices of energy produced at Yacyretá, which currently supplies around 20% of Argentina’s electricity.

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