The clock is ticking on the landmark Itaipú agreement signed between Paraguay and Brazil on May 9, 2024. The deal, which set the electricity tariff at US$ 19.28 per kW-month until the end of 2026, promised annual revenues of US$ 1,250.2 million for Paraguay. However, as the expiration date approaches, the government of President Santiago Peña faces mounting criticism over a lack of transparency in how these funds are used, while the state electricity utility ANDE continues to struggle with underinvestment.
Of the total announced revenue, only US$ 650.9 million actually represents new income from the tariff increase. The remainder consists of long-established payments under the 1973 Itaipú Treaty, such as royalties and compensation for ceded energy, which depend more on generation volume than on the recent negotiation. Meanwhile, Brazil has used approximately US$ 1.117 billion from the binational entity's surplus to subsidize its domestic electricity tariffs, while Paraguay has only compensated ANDE with about US$ 241 million to avoid passing the higher power cost to consumers, postponing critical investments in substations and distribution networks.
A key promise of the 2024 understanding was Paraguay's ability to sell its non-Itaipú energy directly on the Brazilian free market. However, implementation has stalled. The best offer, from Infinity Comercializadora de Energía Ltda., was a low US$ 21.03 per MWh, and the National Economic Team has not yet confirmed the export of 100 MW from the Acaray plant, leaving the project in limbo. Additionally, Paraguay is obligated to increase its contracted power by at least 10% annually until the end of 2026, straining ANDE's cash flow. In 2024, ANDE contracted 2,369 MW and paid US$ 548.3 million; in 2025, it rose to 2,605 MW (US$ 602.9 million); and in 2026, it reached 2,865 MW (US$ 663.3 million).
Beyond the energy sector, President Peña faces growing pressure from the business community. In a recent manifesto, the Federation of Production, Industry and Commerce (FEPRINCO) acknowledged the administration's reforms—such as the creation of the National Tax Revenue Directorate (DNIT) and the Single National Registry—but also issued a sharp critique of the state's inefficiency, prebendalism, corruption, and institutionalized privileges. The business sector demands deeper structural reforms in areas like the fiscal system, pensions, public transport, and social spending, warning that without them, economic competitiveness and confidence will erode.
The manifesto offers conditional support to the government, strengthening Peña's reformist image but also exposing him to dependence on the private sector's agenda. This creates a delicate balance: the business backing provides political capital to push reforms through Congress, but it also risks alienating other social and political actors, potentially leading to a perception of asymmetric adjustment. The government must navigate between meeting business demands for efficiency and maintaining social protection and broader consensus.
As the Itaipú agreement winds down, the need for a revised Annex C—originally due by December 2024 but repeatedly delayed—becomes more urgent. Without a new tariff framework and transparent management of funds, Paraguay risks continuing as a mere exporter of raw energy, missing the opportunity to industrialize using its own hydroelectric power. The coming months will test whether Peña can deliver on both the energy and reform fronts, or whether the twin pressures will expose the limits of his administration.