Paraguay’s ANDE terminates negotiations with ATOME over tariff structure, citing unsustainable 15-year rate freeze

The core dispute centered on ATOME’s requirement that ANDE guarantee a frozen tariff for 15 years while the company planned to source only one-third of its energy needs from its own solar installations, relying on ANDE’s hydroelectric power for the remainder. Báez Reyes stated that maintaining what he characterized as an already low tariff for such an extended period was financially untenable for the utility. The proposed rate of approximately USD 30/MWh became controversial after ANDE later disclosed its technical cost for 220 kV transmission stands at USD 44/MWh, exposing a substantial gap between operational costs and the negotiated price.

ATOME’s investment represented over USD 665 million in committed capital, including USD 245 million in equity from investors including Hy24, IFC, and Germany’s DEG, plus USD 420 million in multilateral development bank financing. The project had secured a 10-year offtake agreement with Yara, the global fertilizer leader, for 100 percent of production. According to ATOME director James Spalding, the company has submitted an improved proposal and maintains it remains a recognized client in ANDE’s demand projections through 2050, though no official cancellation notice has been received.

The termination highlights Paraguay’s regulatory uncertainty as demand pressures mount. ANDE projects the country will reach full hydroelectric capacity from Itaipú and Yacyretá between 2030 and 2031, necessitating new generation sources to accommodate anticipated data center and industrial growth. The Paraguayan executive branch is advancing structural reforms including creation of a new Ministry of Mines and Energy to supersede ANDE in policy formulation, establishment of an independent regulatory entity to mediate between investors and consumers, and diversification into gas pipelines and solar parks.

The case exposes institutional fragility in Paraguay’s investment framework. The original power purchase agreement dated to May 2022 under Tariff Schedule No. 21, established by Decree 6904/2017. Subsequent regulatory volatility included Decree 5307 in January 2026 establishing a Power-to-X regime, followed by modifications under Decrees 5860 and 5861 in April 2026 after union pressure, then partial derogation in June 2026. Union confederation Sitrande has actively opposed preferential industrial tariffs and the proposed regulatory restructuring, viewing both as steps toward privatization.

Báez Reyes emphasized that without private capital participation, Paraguay lacks fiscal capacity to finance required infrastructure expansion independently, making clear regulatory frameworks essential for attracting international investment in the energy-intensive industries the country seeks to develop.