Paraguay received a significant financial boost in the first quarter of 2026. Itaipu Binacional transferred US$107 million to the country under the provisions of Annex C of the Itaipu Treaty. The payments were made between January and March. The amount reflects the continued economic importance of the hydroelectric entity at a time of renewed attention on its financial framework.
Annex C back in the spotlight
Annex C of the 1973 Itaipu Treaty establishes the financial and operational rules governing the binational dam, owned and operated by Paraguay and Brazil on the Paraná River. In recent years, Annex C has become a central topic of discussion, especially after the construction debt was fully repaid. This has opened the door to reassessing energy tariffs and how economic benefits are distributed between both countries.
Annex C outlines key aspects such as cost-sharing, electricity service provisions, tariff structures, and energy commercialisation rules. It also guarantees each country a 50% share of the energy generated. However, due to its lower domestic demand, Paraguay typically sells a large portion of its surplus energy to Brazil, making tariff negotiations especially relevant.
Key transfers support public investment
According to Itaipu’s Financial Directorate, US$65 million of the total transferred in the first quarter came from royalties, while approximately US$37 million corresponded to energy cession payments. An additional US$5 million was allocated to the Administración Nacional de Electricidad (ANDE) as compensation for administrative and supervisory costs. In March alone, royalties reached US$22 million, while energy cession payments amounted to US$10 million. Meanwhile, ANDE received US$1.7 million in compensation during the same month.
These funds play a crucial role in financing public services and infrastructure. A portion of the royalties is directed towards the General Budget of the Nation. The Ministry of Economy and Finance redistributes a significant share to departmental and municipal governments. At the same time, resources from energy cession are channelled into the National School Feeding Fund (Fonae), with additional allocations also benefiting local authorities.
Transfers to ANDE give the state electricity company stable and predictable funding. This allows it to carry out investment plans and improve electricity services across the country. While Itaipu continues to produce strong levels of energy, this provides an important economic contribution to the State. The Annex C rules continue to guide how one of Paraguay’s most important economic assets is managed.
