In 2017, Itaipu accounted for the transfer of more than USD 513 million to the Brazilian and Paraguayan governments in payment of royalties. The payment of financial compensation for the use of the Paraná River's hydraulic potential is provided for in the Itaipu Treaty. The Itaipu's electricity services provision financial bases review, which are included in Annex C of the Treaty and include aspects related to royalties, is scheduled for 2023 when the agreement will turn 50 years old. Therefore, the Federative Republic of Brazil and the Republic of Paraguay are considered as one of the highly relevant issues for the Company and the High Contracting Parties, in the possible construction of a new design of the electric sector of the two countries, and in the conciliation of interests where justice and diplomatic dialogue prevail.

Itaipu's royalties began to be paid with the beginning of the commercialization of energy generated by the plant in March 1985. The payment is calculated based on the energy generated in the month and distributed equally between Brazil and Paraguay. Each country has its own legislation that regulates the distribution and internal use of this resource. In Brazil, the Union receives and redistributes the royalties through federal legislation that establishes the criteria for distribution of values among municipalities, states and federal agencies, allowing royalties to be applied in health, education and security, among other sectors. It is forbidden to apply to the payroll of the staff of the beneficiary municipalities.

How it works

The royalties are calculated based on the energy generated in the month. Itaipu makes two monthly transfers to the National Treasury. In Brazil, it is incumbent upon the National Electric Energy Agency (Aneel) to calculate the amounts to be transferred by the Union to each of the beneficiaries, according to federal legislation.

16 neighboring municipalities receive royalties (15 in Paraná and 1 in Mato Grosso do Sul) proportionally to the flooded area; the states of Paraná and Mato Grosso do Sul; and the states and municipalities indirectly affected, located upstream of the plant. The Environment Ministry, the Ministry of Mines and Energy and the National Fund for Scientific and Technological Development are also entitled to a percentage of Itaipu royalties.