July 29 (Bloomberg) -- An accord by Brazil and Paraguay to alter the revenue-sharing agreement at the Itaipu dam, reached last weekend by the countries’ presidents, is unlikely to pass Brazil’s congress, opposition lawmakers said.

“We will create all kinds of difficulties,” Jose Agripino Maia, leader of the Democrats, the biggest opposition party in the Senate, said in a phone interview from Rio de Janeiro. “It won’t be approved as it is.”

The agreement in principle struck in Asuncion, which would triple the $120 million Paraguay gets annually from the dam’s operations, is still to be fleshed out by a committee slated to report in 60 days, Paraguayan President Fernando Lugosaid this week. The proposal will need lawmakers’ approval in both countries, Brazilian Budget Minister Paulo Bernardo said.

The bid by Brazilian President Luiz Inacio Lula da Silva to settle with Paraguay may hit the same congressional roadblock President Hugo Chavez has in seeking to join the Mercosur trade group. The opposition has stopped Venezuela’s membership in Mercosur for more than three years after the presidents of Brazil, Argentina, Paraguay and Uruguay agreed to admit Venezuela.

Opposition leaders say Brazilian consumers will pay for any new revenue arrangements governing the world’s largest hydroelectric dam by power output. Bernardo told reporters this week that Lula’s proposal won’t lead to higher electricity rates. The government will be responsible for paying the higher bill, he said.

Parana River

The Itaipu dam, which spans the Parana River between Brazil and Paraguay, is operated by a company half-owned by the two governments. Paraguay, whose $12 billion rural-based economy is 1/100th the size of Brazil’s, can use only about 5 percent of the dam’s output. Banned from selling elsewhere by the 1973 treaty, it must cede its unused share to Rio de Janeiro-based Eletrobras, Latin America’s largest utility.

Lugo heralded the new accord as a first step in recovering “sovereignty” over the dam. When Lula announced their agreement, he said bigger countries have an obligation to help smaller ones develop.

“The government will give away taxpayers’ money,” Paulo Bornhausen, the Democrats deputy leader in the lower house, said in a telephone interview from Florianopolis. “We will fight until the last minute to block the measure. It won’t be approved.”

Senator Pedro Simon, a member of Lula’s ruling coalition and supporter of the accord, said it will “take time” to get congress to agree to any changes, which are still being drafted.

“If negotiations involving Venezuela’s entrance in Mercosur hasn’t been approved yet, you can imagine how things will go with an issue like this one,” Simon said

To contact the reporter on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net; Maria Rabello in Brasilia Newsroom at mrabello@bloomberg.net

Last Updated: July 29, 2009 13:20 EDT