Chile president proposes new projects pay local development fees

In a proposal to reduce local opposition to hydropower projects, Chile President Michelle Bachelet announced plans to divert funds from new generators for use in local development projects.

Bachelet told a meeting of industry executives January 6 that she would propose in early 2009 that of some of the local taxes paid by generating companies would be diverted from their headquarters municipalities to the municipalities in which their new generating projects are to be located. The revenue is to be used by the local governments for community development.

Additionally, the president proposed that local power projects pay a set fee per installed megawatt to surrounding communities for local development. In order not to increase the price of electricity, she said those fees would be offset by tax credits to the generators.

A number of proposed hydro projects in Chile have drawn opposition from residents and environmental groups due to fears of the effects project development might have on the surrounding environment and population.

“It is necessary — besides the effort to count on suitable environmental norms and to guarantee good operation of the environmental impact evaluation system — to find mechanisms that allow us to reduce local opposition to power projects, internalizing in the communities part of the national benefits generated by the projects,” Bachelet said. “The development of power projects must also contribute to the local development of the communities.”

The president said the initiatives would seek to conciliate power development with social, cultural, and environmental development in local communities.

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