The conflict originated when Paraguay’s government revoked decrees 5860 and 5861 in early June 2026, eliminating preferential electricity tariffs for convergent industries including artificial intelligence, data centers, and energy-intensive operations. These decrees, issued in April 2026 and preceded by similar measures in January, had established the “Energy-to-X” regime providing regulatory certainty for major industrial projects. The revocation followed sustained protests by the ANDE electrical workers’ union, which rejected what it termed a “privilege contract” with Atome.
Former ANDE president Félix Sosa stated that Atome’s original 2022 contract, which predates the revoked decrees, remains valid with an electricity rate of approximately $33 per megawatt-hour at 220 kilovolts. The union’s general secretary, Adolfo Villalba, contends that ANDE’s technical tariff stands near $44 per megawatt-hour. ANDE formally rejected Atome’s request to modify tariff and commercial conditions in June 2026, citing technical and financial analyses that concluded the requested terms were not feasible.
The Attorney General’s Office confirmed receipt of the notice but clarified that no formal lawsuit or arbitration proceeding currently exists against Paraguay. The institution stated the government is analyzing Atome’s arguments while maintaining openness to dialogue, though it pledged to defend national interests firmly. Paraguay reaffirmed its commitment to legal certainty, investment protection, and compliance with international obligations.
A 2022 complaint filed with Paraguay’s Comptroller General alleged potential patrimonial damage of approximately $117 million over the contract’s life, comparing Atome’s tariff against rates mandated by Decree 7551/2017 for energy-intensive industries in Central Department. That complaint reportedly received no public resolution. The case now presents one of the largest potential investment disputes Paraguay has faced under a bilateral treaty.
Atome maintains the project received binding financing commitments from multilateral development banks including IDB Invest, International Finance Corporation, Netherlands Development Finance Company, European Investment Bank, and Germany’s DEG. The company projects the facility would create 4,000 construction jobs and 1,000 permanent positions during operation.
This article was curated and published as part of our South American energy market coverage.
