Britain’s Atome has notified Paraguay’s state power utility, the National Electricity Administration (ANDE), of the termination of its 2022 power purchase agreement, due to take effect at the end of 2026. According to ABC Color, the company announced the decision in a statement to the London market after failing to agree on a temporary suspension of contractual obligations.
The agreement, signed in May 2022, initially covered 60 megawatts and reached 145 megawatts after three addenda. The power would supply a low-carbon fertiliser plant in Villeta, with a planned investment of US$665 million and operations scheduled to begin on January 1, 2027. At a hearing of Congress’s Bicameral Budget Commission on September 21, ANDE president Miguel Ángel Báez Reyes said the contractual term extended to 2032.
Báez said Atome had asked in August to postpone the start of operations until 2029. He said the site contained only a sign, with no construction, making an extension difficult to believe in. ANDE contracts for power from Itaipu to reserve the supply, although the expected consumption has yet to materialise.
Báez explained that if the September 30 deadline passed without a new addendum, the company would have to provide a bank guarantee; the date was not the expiry of the entire agreement. Without an addendum, the guarantee would amount to 2% of the estimated value of one year’s reserved power: US$800,000 on US$40 million. ANDE had warned that it could cancel the contract without that guarantee.
The company proposed temporarily freezing obligations while seeking a solution. With no agreement on terms, it said it had notified termination to avoid losses and liabilities. Atome says the move does not prevent negotiations for a new agreement or prejudice the rights it claims under the investment treaty.
In the tariff dispute, Atome seeks a 15-year agreement at about US$30 per megawatt-hour, fixed for the first ten years, with a 2.5% increase over the following five. ANDE’s tariff schedule 21, for energy-intensive consumers, provides for about US$36 per megawatt-hour. According to Última Hora, the utility argues that prices below the tariff or its costs threaten its financial health.
On September 17, Atome sent a notice of dispute and intention to arbitrate under the UK–Paraguay bilateral investment treaty. It alleges that the revocation of decrees concerning long-term fixed-price power and the failure to honour a commitment to a new agreement violate the treaty. The procedure requires three months of consultations before possible arbitration at the International Centre for Settlement of Investment Disputes (ICSID). ABC reported that ANDE had not officially responded to the company’s announcement of the contract termination by the time its report was completed.