Atome’s $665m Villeta green hydrogen fertiliser project faces uncertainty over access to project financing after Paraguay unexpectedly revoked a presidential decree underpinning the electricity pricing required for lender drawdown.
It comes less than two months after the company took final investment decision (FID) on its Villeta project, which is set to supply 260,000 tonnes of green fertilisers to Yara under a 10-year deal.
The developer disclosed that a key condition to access its $665m project financing package remains unmet after the government cancelled a January decree that established electricity tariffs for its Villeta project and replaced it with a new framework.
It centres on a revised power purchase agreement (PPA) with state utility Ande. That agreement, already negotiated in form, was intended to lock in fixed electricity pricing for the duration of project financing and replace an existing variable rate arrangement.
Atome warned there is currently “no certainty” that it will reach an agreement with Ande to satisfy the outstanding financing conditions required by project lenders.
For the project, which will produce green hydrogen through electrolysis, power prices are a significant operating expense. Without certainty over long-term electricity pricing, lenders may be unwilling to release funds.
Atome said the revised PPA had been expected to be executed under the tariff structure established in January. However, the company learned on 9 June that the decree had been withdrawn without prior notice or consultation.
While the replacement decree instructs Ande to establish conditions to facilitate investment projects, including Villeta, the previous tariff structure has been removed.
The company is now seeking urgent clarification from both Ande and the Paraguayan government regarding the PPA status, future electricity tariffs, and the arrangements underpinning the project’s financing.
Chair Peter Levine said the company had received assurances “at the highest level” that the original PPA would be executed before the end of June, describing the government’s decision as an unforeseen development.
Villeta had been presented as a “blueprint” for green hydrogen derivative project financing by the company, after securing debt and equity financing from multinational institutions, including IFC, IDB, and the European Investment Bank.
