Alliana Faces an Itaipu Test Between Brazil’s Lower Prices and Paraguay’s Revenue Goals

Alliana Faces an Itaipu Test Between Brazil’s Lower Prices and Paraguay’s Revenue Goals
Pedro Alliana took office after Santiago Peña’s impeachment amid the Ueno Bank crisis, inheriting pressure to rebuild international confidence in Paraguay’s financial system and to settle major external priorities before his term ends in August 2028.

The most immediate regional test is the revision of Annex C of the Itaipu Treaty, which governs the finances of the jointly operated Brazilian-Paraguayan hydropower plant. Brazil argues that the tariff should fall from the provisional rate of $19.28 per kilowatt of contracted capacity per month to roughly $10-$12, now that construction debt has been paid. Its position is that lower costs should benefit Brazilian households and businesses.

Paraguay’s interest points in the opposite direction. The current arrangement has supported public works and social programmes, and Asunción also wants greater freedom to sell energy it does not use directly to buyers in Brazil rather than relying on the existing state-mediated model. A business and international-relations specialist, Marco Aurélio da Silva, said a change of president was likely to affect negotiating style more than substance: “The interest of Paraguay in high revenues and commercial autonomy for its energy share remains a non-negotiable state guideline in Asunción.”

That contrast does not erase shared incentives. Brazil remains Paraguay’s largest trading partner, and both governments have reasons to advance border-security and infrastructure projects. President Luiz Inácio Lula da Silva’s invitation for Alliana to visit Brasília signals that the two sides intend to keep talks open despite past strains, including a 2025 suspension of negotiations after reports of Brazilian intelligence activity targeting Paraguayan officials.

Washington is a parallel pillar of Alliana’s agenda. The new president has discussed continued bilateral cooperation with U.S. Secretary of State Marco Rubio, following earlier cooperation on peaceful nuclear energy, security and technology. A planned U.S.-Paraguayan data centre near Itaipu could give Paraguay a larger domestic use for electricity—and potentially strengthen its leverage with Brazil—while also raising questions in Brasília over how power from the shared dam is used.

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