Atome will terminate the existing 145MW power purchase agreement (PPA) underpinning its Villeta green hydrogen-based fertiliser project in Paraguay at the end of 2026, as its dispute with the country over long-term electricity pricing continues.
The UK-listed developer stressed the move does not amount to abandoning the $665m project and said it remains in discussions with state-owned power firm ANDE and the Paraguayan government over a new long-term, fixed-price PPA.
Atome said it had submitted a notice to terminate the 2022 PPA with ANDE after the parties failed to agree on a standstill that would have suspended its obligations while negotiations continued over a replacement power deal.
“The successful resolution of the current issue would demonstrate and reassure the international community that Paraguay remains a reliable and investable company,” the firm said in a statement.
It comes just weeks after the firm issued a notice of dispute and intent to submit a claim to arbitration to the Paraguayan government pursuant to a bilateral investment treaty between the UK and Paraguay.
Previously targeted to begin operations in 2029, the project will produce calcium ammonium nitrate from green hydrogen, which will be supplied to fertiliser firm Yara under a 10-year offtake deal.
Its $665m financing package from international development banks and private investors, including IDB Invest, the International Finance Corporation, and Hy24, has been underpinned by a 15-year PPA offering prices of around $30/MWh.
However, in June, Paraguay’s president repealed the decrees that granted the power tariffs after objections from state-owned power firm ANDE, which claimed the tariffs would be lower than the cost of producing power over the next decade.
Until now, Atome said it had been engaging with the government and ANDE to resolve the PPA.
The firm had also said it was considering a 300MW solar and battery storage project in Paraguay that could underpin an industrial park around the Villeta development, with progress conditional on resolving power arrangements.
