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Dam Company in Chile Presses Gov’t for Supportive Policies

SANTIAGO, Jun 1 2012 (IPS) - Colbún, the electricity generating company that co-owns HidroAysén and its multi-dam project in southern Chile, has recommended suspending the environmental impact assessment for power transmission lines that would connect the hydropower complex to the country’s central grid, until the right conditions are in place.

The decision of the company, owned by the Matte family which together with the Luksic family is the most wealthy and powerful in the country, was formally conveyed to the Securities and Insurance Supervisor (SVS).

River in Chilean Patagonia. Credit:John Spooner/CC

“As long as there is no national policy enjoying broad consensus that provides the energy guidelines that this country needs, Colbún feels the conditions to develop energy projects of this scale and complexity are not present,” the firm said in a statement to the Chilean regulatory commission.

Experts say Colbún’s position puts pressure on the government of right-wing President Sebastián Piñera, who must now make up his mind whether or not to give increased backing to the mega-project, opposed by 74 percent of Chileans.

HidroAysén, owned by Colbún and the Italian Endesa-Enel group which hold 49 and 51 percent, respectively, of the shares, plans to build five large hydropower plants on the Pascua and Baker rivers in Patagonia in southern Chile.

The project is located 1,600 km south of Santiago in the Aysén region, regarded by environmental groups as one of the world’s last unspoiled wilderness areas and a natural heritage because of its immense biodiversity. It is also one of the largest fresh water reserves on earth.

If built, the hydroelectric plants would flood an area of 5,900 hectares and would generate a total of 2750 megawatts for Chile’s Central Grid System (SIC), which supplies the capital.

At present Chile has an installed capacity of 17,000 megawatts, of which 74 percent powers the SIC, 25 percent serves the Northern Grid (SING), and less than one percent is devoted to two small grid systems in Aysén and the neighbouring southern region of Magallanes.

Halting environmental assessment of the future transmission line – which would be the longest in the world, stretching 1,900 km across nine of Chile’s 15 regions – would paralyse the entire project, costed at 3.2 billion dollars, of which only 220 million dollars have so far been spent.

In the view of Luis Casado, a political analyst, Colbún’s recommendations are a way to “blackmail” the government with the intent to ensure that the company’s investments are protected.

According to Casado, the company is seeking to speed up government approval of the 2012-2030 Energy Plan, now before Congress, which among other things proposes construction of a public power line.

“In Chile, private companies are accustomed to doing whatever they please, that is, they cannot bear opposition to their projects, or having citizens question the premises on which their investments are based,” said Casado.

Environmentalist Juan Pablo Orrego, the international coordinator of the Patagonia Without Dams campaign, told IPS that Colbún’s decision “confirms the harebrained risks involved in this project, from energy generation to transmission.

“We don’t fully understand what is going on, but apparently Colbún is trying to put pressure on the government to speed up the ‘public electricity highway’ President Piñera promised,” he said.

Orrego, who holds a master’s degree in environmental science and was awarded the 1998 Right Livelihood Award (Alternative Nobel Prize), said that Colbún appeared to expect “faster action” by the government.

The company wants to force the government’s hand because otherwise its transmission line would be completely unviable: its long route takes it through national parks, indigenous people’s territories and tourist spots, and would result in “literally thousands of lawsuits,” he said.

“It’s the first time a government, and especially a right-wing administration, has been willing to break with the dogma of privatisation in Chile, and offer a public electricity highway to two specific companies: HidroAysén and Energía Austral,” said Orrego.

The environmentalist said HidroAysén “completely underestimated the spirit of Chileans. Things in this country have changed, and the companies find themselves up against serious adversaries with well-founded arguments” against the project.

“What happened with HidroAysén indicates we were right to point out that there is a serious problem with energy development in Chile, involving legislation, state institutions, and standards and regulations,” he said.

“What we should do, and what the government should do, is expand the debate so that we can find a consensus proposal,” he said.

Casado said the government is caught between “doing what its peers – since the people in the government are part of the world of financial investments – want, and its fear of the public reaction.”

The government replied to Colbún on Thursday May 31, saying it has a defined long-term energy policy, and that the decision to suspend work on the environmental impact assessment is for “the private company” to reach.

However, Finance Minister Felipe Larraín stressed that Chile “cannot rule out a clean source of energy like hydroelectric power,” because “we are going to need to use all of our energy sources.”

In May 2011, Piñera said that without Hidroaysén “we are condemning our country to a blackout.” Since then his approval rating in the polls has plummeted to its present level of just 26 percent.

Public protests against HidroAysén were supported by 120,000 people in central Santiago in early 2011.

Isabel Allende, the socialist chair of the Senate Mining and Energy Commission, said Colbún’s announcement has created “an atmosphere that is not very healthy.

“There is a climate of pressure. People associated with the mining industry state that nothing in Chile is certain, that there isn’t enough energy, and so on. I think they are just trying to bring pressure to bear so that the projects are approved in the way they want, and quickly,” she told IPS.

Allende said the “threat” from the company was inappropriate, and argued that civil society and the government should not give in to the pressure.

In the midst of the controversy, the board of directors of HidroAysén confirmed it was aware of Colbún’s recommendations, but said it had not yet taken a decision about the project.

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