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Paraguay Itaipú, Yacyretá, and Corpus
Only superlatives adequately describe the grandeur of the Itaipú
hydroelectric power plant. Itaipú was the world's largest
hydroelectric power plant, located on one of the world's five
largest river systems. Itaipú's cost was estimated at US$19
billion, but no exact figure was calculated. The plant's dam, small
compared to those at some hydroelectric plants, nonetheless
required the diversion of the entire Río Paraná, including the
permanent flooding of the spectacular Guairá Falls and of some
235,000 hectares of land. Over a 5-year period, the concrete poured
each day would have been sufficient to construct a 350-story
building. More importantly, the project created an "Itaipú
euphoria" that brought jobs to 100,000 Paraguayans, instilled a
renewed pride in the country, and strengthened the nations's image
vis-à-vis its giant neighbor and largest economic partner, Brazil.
The Itaipú project began with the signing of the Treaty of
Itaipú between Paraguay and Brazil on April 26, 1973. The treaty
created a binational authority--Itaipú Binacional--to see that the
two countries shared equally in the plant's operation. Itaipú
provided Paraguay unprecedented employment opportunities and
capital investment, but inadequate planning on the part of the
government and the private sector hindered the country's ability to
reap the project's full potential. Approximately 80 percent of the
plant's construction was performed by local Paraguayan-Brazilian
industry. Because the Paraguayan parliament demanded early on that
Paraguay receive a fair share of the project's work, Paraguay was
officially earmarked for 50 percent of all major contracts. In
reality, Paraguay's small industrial sector was no match for
Brazil's more technologically advanced industries. Observers
believed that Brazilian companies actually rendered 75 percent of
the total workload and provided almost all the key inputs such as
steel, cement, machinery, and special technical expertise. Even
housing materials for Paraguayan construction workers were smuggled
in from Brazil.
After five years of labor, the Río Paraná was diverted, and from
1978 to 1982 key construction was completed on the plant, dam, and
spillways. Brazil's serious economic problems in 1983 and 1984
slowed the completion of the dam, but overall delays were
reasonable by regional standards. Electricity was first generated
on October 25, 1984, more than a decade after the signing of the
treaty.
Electrical operations were slowly developing at Itaipú in the
late 1980s, and full capacity was not expected to be reached until
1992. Because of delays in Brazil's sixty-cycles-per-second system,
the plant's fifty-cycle units were the first to produce
commercially, and this electricity went to Paraguay. Itaipú was so
colossal, however, that ANDE could process only about 30 percent of
the output of 1 of Itaipú's 18 generators at peak output. As
stipulated in the treaty, Brazil and Paraguay bought their
electricity from the binational power facility at predetermined
rates. Because Paraguay was expected to use only a tiny fraction of
its power for the foreseeable future, it sold most of its share
back to Brazil, also at a predetermined rate, including normal
compensation and royalties.
The major debate over Itaipú in the late 1980s revolved around
the low prices that Paraguay had negotiated in the original treaty.
What Brazil paid Paraguay for electricity was one-ninth what
Paraguay was scheduled to receive from Argentina under the Treaty
of Yacyretá, signed just seven months after Itaipú. After twelve
years of indecision about how to adjust the Treaty of Itaipú, on
January 25, 1985, Paraguay and Brazil signed five revisions to
cover matters of financial compensation. Paraguay gained
significantly from the 1985 revisions, but most analysts believed
Paraguay deserved still greater compensation for its electricity.
Further revisions were likely before the end of the century.
The Yacyretá project, although generally overshadowed by the
colossal Itaipú project, was one of Latin America's major publicsector projects in the 1980s. Established hastily by Argentina's
Peronist government on December 13, 1973, the Yacyretá project was
stalled for years as a consequence of regional maneuvering,
lobbying by the Argentine nuclear and oil industries, and political
instability in Argentina. After ten years of delays, the first
major engineering contract finally was awarded in June 1983. As
with Itaipú, Yacyretá was hindered by the general lack of physical
infrastructure at the dam site. Also as with Itaipú, Paraguayan
firms did not receive equal work, despite stipulations in the
initial agreement. Construction of the dam and the hydroelectric
plant continued throughout the 1980s, but the major construction
phase did not begin until the late 1980s, and numerous delays--
mostly political--persisted. Yacyretá was not expected to become
fully operational until the mid-1990s, more than twenty years after
the treaty's signing and at a cost of as much as US$10 billion,
five times the original calculation.
An early point of contention between Paraguay and Argentina was
the percentage of each country's land that would be flooded for the
project's dam; more than 1,690 square kilometers would be needed--a
larger area than was flooded for Itaipú. It esd sgreed that
flooding was to be just about equally divided. Another disagreement
involved Paraguay's exchange-rate policies. Exchange rates
determined the final price Argentina would pay for the plant's
electricity. This issue continued to be negotiated in the late
1980s.
When completed, Yacyretá would be roughly one-quarter of the
size of Itaipú, with an initial installed capacity of 2,700
megawatts and an annual generation capacity in excess of 17,500
gigawatt hours. Yacyretá's electricity per unit would be more
expensive to generate than Itaipú's, and the unit price Paraguay
would eventually receive was expected to be much greater. None of
the electricity produced by Yacyretá was intended for use by
Paraguayans; it was to be sold back to a binational body that would
manage the plant. But the gearing up of key construction activity
at Yacyretá in the late 1980s was expected to give a boost to the
Paraguayan economy, which was suffering from what one observer
termed the "post-Itaipú blues." Observers believed that the
Argentine-Paraguayan project would provide renewed construction
jobs, large capital inflows, and eventually badly needed foreignexchange revenues. The binational project also would provide
seriously needed bridges, highways, improved river transport at the
port of Encarnación, and even increased irrigation potential for
nearby rice fields.
Located midway between Itaipú and Yacyretá on the Río Paraná was
the proposed site of the Corpus hydroelectric power plant. After
years of preparations, Corpus remained in the planning stage in the
late 1980s because of the slow progress at Yacyretá. Hydrologically
linked with Itaipú and Yacyretá, the Corpus plant was designed to
make optimal use of the falls at Itaipú and the currents of
tributary rivers. In order to integrate and maximize the various
projects along the Río Paraná, in October 1979 Paraguay, Argentina,
and Brazil signed the Itaipú-Corpus Accord, which set specific
regulations for the projects and improved communication among the
countries. Although planning was still not final in 1988, Corpus
was expected to be comparable in size to Yacyretá. When operable,
Corpus would raise Paraguay's electricity output to an estimated
300 times its domestic demand. Beyond Corpus, Argentina and
Paraguay also planned several smaller hydroelectric power plants
downstream from Yacyretá, including Itatí-Itá-Corá and others.
Future hydroelectric development along the river would continue to
be coordinated by the Combined Technical Commission for the
Development of the Río Paraná.
Data as of December 1988
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