A power price dispute tests a green fertiliser project in Paraguay

A green fertiliser project in Paraguay assembled hundreds of millions of dollars in financing commitments, then encountered a problem central to its economics: the terms on which it would buy electricity. By October, developer ATOME had given notice to terminate its existing power contract while pursuing negotiations over a replacement. ^{[6] [7]}

The Villeta project was designed to turn renewable power into an industrial product. In March, IFC announced the signing of debt-financing documents, describing a plant intended to use clean hydrogen to make fertiliser and strengthen regional agricultural supply. The World Bank Group institution committed $25m of subordinated debt and helped mobilise a $50m concessional loan from the Green Climate Fund. The structure was intended to absorb risks associated with a first commercial project. ^[5]

ATOME subsequently declared a conditional final investment decision on April 23 for the planned 260,000-tonne-a-year plant, according to its annual accounts. The approximately $665m funding package comprised $245m of project equity and $420m of non-recourse project debt. Shareholders approved the transaction in May. Those amounts describe agreed financing, rather than money already spent building the plant. ^[6]

For a capital-intensive industrial project, agreement on funding is only part of the route to construction. Lenders also need the commercial arrangements underpinning repayment to become effective. Electricity prices determine the cost of producing hydrogen and therefore affect what a fertiliser plant can earn. An arrangement that leaves those prices uncertain can prevent committed finance from becoming usable capital.

ATOME said on October 1 that it had been unable to agree a temporary standstill with ANDE, the state electricity company, on a power purchase agreement first signed in 2022 and later expanded to 145MW. It served notice to terminate that agreement at the end of 2026. The company said the action should not prevent talks on a replacement arrangement or prejudice its treaty rights. ^[7]

The replacement contract and the original contract are distinct. ATOME alleges that Paraguay revoked decrees supporting a long-term fixed-price supply arrangement and withdrew its agreement to sign the revised contract. Those allegations have not been determined by a tribunal. In an October 9 statement responding to media coverage, the company restated its treaty-based position and said it remained open to an amicable resolution. ^{[7] [8]}

The Paraguayan government has also reserved its legal position. In a statement dated September 17 and reproduced in English by ATOME the following day, the attorney general's office said no lawsuit or arbitration had then been initiated. It described the notice as opening a three-month period to explore a settlement, said it was examining the claims and pledged to defend the national interest. ^[9]

The disagreement raises a commercial question beyond the legal process. A long-duration industrial tariff gives a developer price certainty, while the supplier must consider the cost of serving that demand and the alternative uses of its electricity. A bankable contract needs a durable allocation of those risks. Development-bank participation cannot substitute for agreement between the buyer and the power supplier.

Villeta also shows why announcements of committed finance require careful reading. A signed financing package can represent extensive work and significant investor confidence while leaving conditions that still prevent drawdown. The terms of the electricity supply, the effectiveness of the financing and actual construction expenditure are separate measures of progress.

The prospect of settlement remains important to both sides. A workable replacement power agreement could restore a route to development; an unresolved dispute could prolong the period before investors learn what their commitments will produce. For Villeta, the next meaningful milestone is an executable commercial arrangement that allows the plant to proceed. ^[8]