The sale of energy from the Iguazu plant would have benefited President Jair Bolsonaro's family.
Paraguay canceled Thursday an agreement for purchasing energy from the Itaipu binational hydroelectric power plant, a transaction which threatened to take President Mario Abdo Benitez and Vice President Hugo Velazquez to a political trial, under accusations of poor performance of functions, treason and influence trafficking.
"This moment, at the National Chancellery, a document is signed that leaves the May 24 binational act without effect," the Paraguayan Foreign Ministry tweeted.
Prior to this unexpected event, Paraguayans began to mobilize against possible corruption acts linked to an energy contract which would see the state-owned electricity company's spending increase by up to US$300 million.
Local media revealed that Jose Rodriguez, the vice president's legal advisor, negotiated the exclusion of a clause to benefit Leros Comercializadora, a Brazilian company linked to the family of the far-right President Jair Bolsonaro.
On Thursday, Esperanza Martinez, a senator of the left-wing Front Guasu (FG), the party of former president Fernando Lugo (2008-2012), expressed her approval of holding a political trial into teh actions of the Paraguayan president and vice president.
Workers' Party Alert: Itaipu Energy Agreement is negotiated with low profile.
"There are no reasons to keep them in their positions if it is found that there was [corruption] in the agreement signed with Brazil," Martinez said and added that her party will file a criminal complaint against both officials.
"The government broke out in an internal crisis after the Itaipu pact was made public," she said and requested the Abdo administration deliver all documents related to the energy contract.
According to Brasil 247, the document annulling the deal establishes that the governments of Brazil and Paraguay "agreed that the lack of agreement on the energy schedule by Itaipu negatively affects the electricity bill of the binational entity."
After the cancellation of the energy agreement signed with the Bolsonaro administration, the Paraguayan president announced that officials who "have been negligent in their work" will be dismissed.
"I will not tolerate corruption," Abdo Benitez said and asked congressmen to continue dialoguing "to find a way out that does not break the democratic process, which needs to be strengthened in Paraguay."