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The Brazilian and Paraguayan governments receive financial compensation called royalties for Itaipu's use of the Paraná River hydraulic potential to generate electricity.

The so-called royalties are paid monthly since Itaipu started selling electricity in May 1985, pursuant to Annex C of the Itaipu Treaty signed on April 26, 1973.

In Paraguay, royalties are fully relayed in full to the Ministry of Finance, which has has already received US$ 5.4 billion.

In Brazil, the National Treasury receives the royalties in full that have been paid since Itaipu started trading energy.

Royalty payments are proportional to the amount of land submerged by the lake. Since 1985, Itaipu has paid Brazil over US$ 5.7 billion in royalties.

Royalties Law

In Brazil, the National Treasury Department was the sole recipient of royalties until January 11, 1991, when the Royalties Law came into effect providing for the distribution of royalties among states, cities and the federal government.

According to the Royalties Law, in Brazil, the financial compensation is distributed as follows: 25% to states, 65% to cities and 10% to federal bodies (Ministry of the Environment, Ministry of Mines and Energy, and the National Scientific and Technological Development Fund).

Of the 65%, aimed at the municipalities, 85% of the amount is distributed evenly to the surrounding cities, that is, those directly affected by the plant’s reservoir. The remaining 15% are distributed among states and cities affected by reservoirs upstream from the power plant, considering they help increase the energy generated there.

The change in legislation benefited 15 cities in Paraná and the State Government, those who were most affected by the flooding of land areas that now form the reservoir, besides Mundo Novo (MS).

In Paraná, the cities entitled to receiving royalties area: Santa Helena, Foz do Iguaçu, Itaipulândia, Diamante D’Oeste, Entre Rios do Oeste, Guaíra, Marechal Cândido Rondon, Medianeira, Mercedes, Missal, Pato Bragado, São José das Palmeiras, São Miguel do Iguaçu, Santa Terezinha de Itaipu and Terra Roxa.

The royalty legislation benefited 15 cities in Paraná, the State Government, along with those most affected by the creation of the reservoir and, also, the city of Mundo Novo in the State of Mato Grosso do Sul.

The transfer of the royalty amount to be paid by Itaipu Binacional varies according to the generation of energy destined for sale in each month.

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