On January 16, 2026, the Executive Branch enacted two complementary decrees establishing a regulatory framework to attract high-value-added industrial investments in the energy sector to Paraguay: Decree No. 5306/2026 on Convergent Industries and Decree No. 5307/2026 on Power-to-X Industries. Both regulations provide significant tariff incentives and long-term regulatory stability for energy-intensive projects.
Key Provisions
- Sectoral public policy: Both decrees designate the development of these industries as a matter of State policy, acknowledging their potential to reshape the national productive structure and to foster sustainable, long-term value chains.
- Specific consumption groups: Special categories of electricity users are created. Decree No. 5306 establishes consumption groups at Extra High Voltage (500 kV), Very High Voltage (220 kV), High Voltage (66 kV), and Medium Voltage (23 kV). Decree No. 5307 creates a specific group at Very High Voltage (220 kV) exclusively for Power-to-X industries.
- Competitive tariffs with 15-year stability: Both decrees set preferential tariffs denominated in U.S. dollars, with guaranteed validity for up to 15 years, effectively eliminating uncertainty regarding energy costs. The tariffs comprise components for reserved capacity and energy consumption, with differentiated rates for peak and off-peak hours. In addition, Decree No. 5306 provides for an annual adjustment mechanism indexed to U.S. benchmarks (PPI and CPI) in order to preserve the purchasing power of the U.S. dollar.
- Accreditation authorities: Decree No. 5306 establishes a Bi-Ministerial Commission composed of the Ministry of Industry and Commerce (MIC) and the Ministry of Information and Communication Technologies (MITIC) to accredit Convergent Industries. Decree No. 5307 designates the MIC as the sole authority responsible for accrediting Power-to-X industries.
- Productive linkage plans: Interested companies are required to submit plans providing for the progressive incorporation of domestic goods, services, and workforce, the establishment of linkages with local suppliers, and the implementation of training and technology transfer initiatives. Decree No. 5307 further requires the submission of plans for the incorporation of on-site power generation or electricity directly contracted by the company.
- Repeal of prior regulations: Decree No. 5306 expressly repeals Decrees No. 7551/2017, No. 6371/2016, and No. 7406/2011 governing electro-intensive industries, redirecting energy policy toward activities with higher value added.
Benefits for Investors
These decrees offer significant competitive advantages for large-scale industrial investments:
- Predictability and stability: The 15-year tariff guarantee removes one of the principal investment risks associated with capital-intensive projects. Tariffs denominated in U.S. dollars facilitate international financial planning and reduce foreign exchange exposure.
- Competitive renewable energy: Paraguay has an energy matrix that is nearly 100% hydroelectric, enabling production with a minimal carbon footprint. The energy abundance derived from the Itaipú and Yacyretá hydroelectric plants ensures a reliable supply for large-scale industrial operations.
- Alignment with global trends: The decrees implement a “powershoring” strategy, aimed at relocating energy-intensive industrial operations to regions with access to clean, abundant, and low-cost energy. This global trend responds to decarbonization requirements, supply chain resilience, and proximity to end markets. Paraguay is strategically positioned near North America and Europe, with already-developed energy infrastructure.
- Economic outlook: According to the technical report underpinning the decrees, artificial intelligence, cloud computing, and energy transition technology sectors are expected to account for between 18% and 34% of global GDP growth by 2040.
- Human capital development: The establishment of these industries will generate demand for specialized talent, driving the education system toward higher standards in areas such as cybersecurity, data management, chemical engineering, and advanced industrial processes.
Implementation and Next Steps
Both decrees establish a 30-day period to complete the necessary administrative procedures. The Bi-Ministerial Commission (Decree No. 5306) and the MIC (Decree No. 5307) are required to issue implementing regulations governing accreditation procedures and technical criteria. ANDE, Paraguay’s state-owned electricity utility, will implement the corresponding operational measures to ensure electricity supply under the new tariff regimes.
Interested companies must develop their productive linkage plans in accordance with the guidelines to be issued by the competent authorities, demonstrating a commitment to local value creation and sustainability.
These decrees represent a structural shift in Paraguayan industrial policy, transforming the country’s comparative energy advantage into concrete industrial development and positioning Paraguay as a strategic destination for global technology and energy transition investments.
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