August 2, 2019 / 6:41 PM / 4 months ago

UPDATE 1-Brazil and Paraguay may sign new Itaipu deal in a month -director

(Adds details on timing of new deal)

RIO DE JANEIRO, Aug 2 (Reuters) - Brazil and Paraguay are to begin talks on Friday over a new energy deal for the Itaipu hydroelectric plant, Joaquim Silva e Luna, the Brazilian director for Itaipu told Reuters, adding that a new agreement could be reached in a month.

Brazil and Paraguay on Thursday annulled the agreement signed earlier this year after Paraguayan lawmakers threatened to impeach President Mario Abdo over it.

The Paraguayan lawmakers backed down on their threat on Thursday after the cancellation of the deal. Abdo apologized for his handling of the deal, which opposition lawmakers said violated the country’s sovereignty.

The controversy marked the first major crisis for Abdo, who maintains a close relationship with far-right Brazilian President Jair Bolsonaro. On Thursday, Bolsonaro said he supported Abdo, one of his earliest regional allies.

The furor was sparked by an arrangement - made public last week - regarding the cost of energy from the giant Itaipu hydroelectric plant that straddles the two countries. Officials and lawmakers said the pact would be harmful for Paraguay and cost the state about $200 million.

Paraguay is highly reliant on both energy and revenue from Itaipu, which ranks as the world’s largest hydroelectric plant. (Reporting by Rodrigo Viga Gaier Writing by Gabriel Stargardter Editing by Will Dunham and Bill Trott)

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