Bringing the decades-long row with its neighbor Paraguay to an end, Brazil Saturday announced its decision of a three-fold increase in its annual compensation to Paraguay for operating the massive, jointly-owned Itaipu hydroelectric dam on the common border of the two countries.

The raise in compensation to nearly $360 million - which comes months after a hold up in the negotiations - will finally see the end of a much-prolonged dispute regarding which country gained more from the electricity generated by the world’s largest hydroelectric dam in terms of output.

Brazil, which clearly has a much faster development pace than its smaller and basically rural neighbor, currently pays Paraguay $120 million a year for availing power supply from the hydroelectric facility.  

The “historic agreement” was announced in Asuncion on Saturday, by the Presidents of both the countries – the Brazilian President Luiz Inacio Lula da Silva and the Paraguayan President Fernando Lugo.

Under the new deal, Paraguay would be allowed to circumvent the state-controlled utility Centrais Eletricas Brasileiras SA, and directly sell its unused power in Brazil before the repayment of the dam’s debt in 2023. The coming months will see negotiations about a complete schema for Paraguay’s entry into the Brazilian energy market.

Talking about the recent agreement with Brazil, Lugo said: “We’ve shown the political maturity to seek consensus and areas where we are in agreement.”