By Luciano Costa and Rodrigo Viga Gaier
SAO PAULO/RIO DE JANEIRO, April 16 (Reuters) - Brazil's power industry has balked at a request from Argentina to release water at the giant Itaipu hydroelectric dam, said people familiar with the matter, which would lower scarce reserves to help Argentine farmers load more soy at river ports.
Brazil and Argentina are expected to hold a fresh round of talks on Friday about the matter, said one of the sources, who requested anonymity due to diplomatic sensitivities.
With the Parana River at its lowest level in a decade, ships departing from Argentina must carry less grain to pass through the waterway. The country's foreign ministry confirmed it was asking Brazil for the favor to raise river levels.
However, dry weather has also drained all but 17% of the reservoirs in southern Brazil feeding the Itaipu mega-dam, which is running far below capacity due to the coronavirus outbreak.
"With lower-than-average reserves we're going to spill water ... pouring money down the spillway?" said one of the Brazilian sources.
The move would help to ramp up Argentine soy exports, which compete with Brazilian farmers' output on global markets.
"This talk from the Argentines is just a wish," said another source in Brazil's power sector. "We're recovering our reserves through the end of April."
A representative for Argentina's foreign ministry said the country was not offering anything in return for Brazil to raise the level of the Parana River.
The talks are being conducted between the two country's foreign ministries, Brazil's National Electric System Operator and Paraguay, which runs Itaipu as a joint venture with Brazil, according to the sources.
An Itaipu representative said dam operator itself was not participating in the discussions.
Itaipu itself does not control a reservoir, but its capacity is affected by reserves at upstream hydroelectric plants in Brazil. (Reporting by Luciano Costa in Sao Paulo and Rodrigo Viga Gaier in Rio de Janeiro Additional reporting by Hugh Bronstein in Buenos Aires Writing by Jake Spring Editing by Brad Haynes and Marguerita Choy)
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