Atome PLC (LSE:ATOM) has provided an update on its investment dispute with the Paraguayan Government concerning electricity supply arrangements for its US$665 million Villeta green fertiliser project, warning that it may pursue an international arbitration claim seeking damages exceeding US$100 million if a negotiated resolution cannot be reached.
The AIM-listed company also rejected reports published in Paraguayan media concerning the project and the dispute, describing the coverage as inaccurate and misleading.
Atome confirmed that any formal investment treaty claim would be pursued through international arbitration at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., under the UK-Paraguay Bilateral Investment Treaty, rather than through Paraguay’s domestic courts.
The disagreement centres on the electricity pricing and regulatory arrangements underpinning the Villeta development, which is designed to use hydropower to manufacture green fertiliser products.
According to Atome, its investment decisions were based on assurances from Paraguayan state authorities regarding access to electricity at previously agreed tariffs, supported by a regulatory framework established for the project.
The company said these arrangements included a new power purchase agreement (PPA) negotiated with Paraguay’s national electricity utility, Administración Nacional de Electricidad (ANDE).
Atome maintains that the subsequent repeal of the regulatory framework affected the commercial basis on which the project had been developed.
The company said the changes occurred as the Villeta project, which it described as fully funded, was preparing to begin construction.
Atome argues that the removal of the agreed regulatory arrangements has affected the project’s financial viability and led it to serve a formal notice of dispute under the bilateral investment treaty.
The company has continued discussions with Paraguayan authorities in an effort to reach a negotiated settlement.
As part of those discussions, Atome submitted a proposal for a long-term electricity pricing structure under a power purchase agreement that it considers capable of supporting the project’s development.
However, the company said the proposal has effectively been rejected by ANDE and the Paraguayan Government. No alternative commercial terms have been agreed, according to Atome.
The company also reported that the continuing negotiations have resulted in delays to the project timetable and additional expenditure.
Atome warned that, without an agreed resolution, it may proceed with a formal arbitration claim seeking damages well into nine figures.
No arbitration award or determination of liability has been reported, and the company’s potential claim remains subject to the initiation and outcome of any formal proceedings.
Atome reiterated that it remains willing to pursue an amicable agreement with the Paraguayan authorities that would allow the Villeta development to proceed under commercially viable electricity supply arrangements.
The project’s future timetable remains dependent on resolving the outstanding electricity tariff and regulatory issues.
About Atome PLC
Atome PLC (LSE:ATOM) is an AIM-listed company developing green fertiliser production projects using renewable electricity. Its principal development is the Villeta project in Paraguay, which is designed to use hydropower to manufacture ammonia-based fertiliser products.
The company is pursuing large-scale fertiliser production supported by international development financing and long-term electricity supply arrangements. Its Villeta project is currently affected by an unresolved dispute concerning power tariffs and the regulatory framework governing electricity supply.
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