Paraguay removes 4 from Itaipu Council after bank collapse with US$163.8 million from the dam

Paraguay's new president, Pedro Alliana, removed four Paraguayan members from the Itaipu Council on Tuesday (10), the binational hydroelectric dam it shares with Brazil. The change comes amid the crisis at digital bank Ueno, which closed its doors on November 3 with money from the hydroelectric plant deposited.

There were two decrees issued on the same date. Decree 7216 ended the roles of Carlos Fernández Valdovinos, former economy minister, and Claudia Centurión, former minister of public works and communications. Decree 7215 accepted the resignations of Roberto Moreno Rodríguez, former legal advisor to the presidency and close to former president Santiago Peña, and Javier Giménez García de Zúñiga, former minister of industry and commerce and former chief of staff. According to newspaper ABC Color, the texts do not explain the reasons, do not mention Ueno, and do not name replacements.

What does the Ueno bank have to do with Itaipu?

The Paraguayan side of Itaipu was one of Ueno's largest clients. On the day the country's central bank closed the institution for insolvency, the binational entity had US$163.8 million and 115.2 billion guaranis in accounts at the bank, according to a statement from the dam cited by newspaper Última Hora. The amounts equal 7.6% of what Brazil transferred to the Paraguayan side of Itaipu between 2024 and 2026, according to Gazeta do Povo.

Itaipu said it has filed measures with Paraguay's Public Prosecutor's Office to try to recover the money, and that the situation does not affect the dam's operation. Senator Gustavo Leite of the ruling Colorado Party had publicly called for the removal of the council members linked to Peña, as well as the binational entity's financial director, Rafael Lara, whom he blames for the deposits at Ueno.

The bank's collapse brought down the government. Peña left office after an impeachment process linked to the collapse and is being held in pretrial detention at a military facility. Alliana, who was vice president, took office on Friday (6). On Tuesday, he said that nearly 95% of Ueno's savers, about 1.74 million people, have already received money from the deposit guarantee fund, totaling US$330 million, and that the rest would be paid by Wednesday.

Who remains on the council

With the departures, the Paraguayan side still has Miguel Ángel Báez Reyes, former president of Ande, Paraguay's state-owned electricity company; Félix Sosa, who returned to lead Ande this week; and Foreign Minister Rubén Ramírez Lezcano. The dam's Paraguayan director-general, Justo Zacarías Irún, remains in office.

What changes for Brazil

The crisis comes at a delicate moment for the review of Annex C of the Itaipu Treaty, the section that sets the energy tariff. The annex expired in February 2023, when the construction debt was finally paid off, and the two countries have not yet agreed on a new model. The current tariff for the energy sold, at US$17.66 per kilowatt per month, is valid until the end of this year. Brazilian organizations estimate that the value should be between US$10 and US$12.

According to Félix Sosa, Alliana intends to travel to Brazil later this year to resume negotiations. For Carlos Faria, president of Anace, an association of large energy consumers, the crisis leaves the issue "on the back burner." Meanwhile, Bruno Pascon of Brazilian energy consultancy CBIE tells Gazeta do Povo that the impasse could delay the agreement, but also gives Brazil room to seek a lower price for Brazilian consumers.