Atome Terminates USD 665 Million Paraguay Energy Contract, Maintains Arbitration Threat

Atome notified the termination of its 2022 power purchase agreement with Administración Nacional de Electricidad following the September 30 contractual deadline, citing the need to avoid liability from remaining bound to terms it considers unviable. The company had proposed a standstill agreement to freeze obligations during talks but received no acceptable response from ANDE or the Paraguayan government. The original contract, signed in May 2022 and amended to 145 MW capacity, underpinned a USD 665 million green fertilizer manufacturing facility planned for Villeta, 30 kilometers from Asunción.

The dispute centers on electricity pricing. Atome seeks a 15-year fixed tariff of USD 30 per megawatt-hour without adjustment for the first decade, arguing this rate is essential to secure international project financing. ANDE’s current Tariff Schedule No. 21 charges electrointensive industries approximately USD 36 per MWh, which the utility’s president Miguel Báez insists reflects production costs. Selling below cost would compromise the state company’s financial health over the coming decade, Báez told Congress in September, adding that Atome has constructed nothing at the Villeta site beyond signage.

The conflict escalated after President Santiago Peña revoked decrees 5860 and 5861 in April 2026 under public pressure. Those decrees, issued in January, had established preferential tariffs for convergent industries including hydrogen production, with rates between USD 25 and USD 30 per MWh closely matching Atome’s November 2025 request. On September 17, Atome filed a dispute notice under the UK-Paraguay bilateral investment treaty, alleging revocation of the decrees violated long-term energy supply guarantees and constitutes treaty breach. The company maintains three months of mandatory consultation before proceeding to the International Centre for Settlement of Investment Disputes.

Political controversy surrounds the project. Juan Pablo Nogués Peña, Atome’s lead project manager in Paraguay, is President Peña’s cousin and simultaneously serves as a Ministry of Industry representative on the National Science and Technology Council. Labor union Sitrande and legal experts allege potential conflict of interest, though Chief of Staff Javier Giménez denies any incompatibility. Former ANDE president Félix Sosa noted in June that Atome’s 2022 contract tariff of approximately USD 33 per MWh remains valid despite decree revocations, as the original agreement predated those instruments. ANDE reportedly reserved energy capacity from Itaipú based on consumption projections Atome never realized, having repeatedly pushed back operational start dates from initial 2024 targets to 2029 requests. The company’s termination notice emphasizes continued good-faith negotiations while preserving all treaty rights and arbitration options.