Brazil to discuss US$ 2 billion loan for infrastructure in Paraguay

By Richard High08 May 2009

The Brazilian government is willing to loan Paraguay US$ 2 billion to finance infrastructure and social programs, according to the Estado news agency.

Quoting Brazilian Energy Minister Edison Lobao, Estado said the money could include up to US$ 500 million for the construction of transmission lines between the Brazilian-Paraguayan Itaipu hydroelectric project (HEP) and Assuncion, the Paraguayan capital.

Brazil's loan offer comes in lieu of concessions on Paraguay's recent demands for a reduction in the country's debt on construction of the Itaipu. Paraguay has threatened to contest repayment of its US$ 4.2 billion in debt on the Itaipu HEP in international courts.

Brazilian President Luiz Inacio Lula da Silva is to meet Paraguayan President Fernando Lugo this week to discuss Paraguay's concerns over the Itaipu HEP.

Estado quoted Mr Lobao as saying Brazil was willing to listen to Paraguay's demands but didn't offer any guarantees on debt reductions or electricity rate increases proposed by Paraguay.

"Paraguay currently receives US$ 600 million more annually in energy than before Itaipu's construction and has received US$ 4 billion in royalties. Itaipu has been of great benefit for Paraguay and not a detriment."

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