UPDATE – Chile gives antitrust approval to 2,355-MW HidroAysen

Chile’s antitrust commission has approved Centrales Hidroelectricas de Aysen S.A. (HidroAysen), the joint venture of electricity generators Endesa Chile and Colbun to build the five-plant, 2,355-MW Aysen hydroelectric complex in remote southern Chile.

Tribunal de Defensa de la Libre Competencia (TDLC) said October 19 the companies could proceed with the US$4 billion Aysen complex if they complied with a series of conditions. The company plans to build two power plants on the Baker River and three on the Pascua River, which are expected to contribute a total of 18,430 gigawatt-hours per year to Chile’s central power grid.

TDLC’s primary conditions relate to a proposed 1,300-mile transmission line to connect the remote hydro projects to Chile’s central electricity grid, which serves the most populous part of the country including the capital Santiago. The commission said the companies must allow bids from third parties who want to use the line. Any such company must be given at least six months to make its bid.

Chile’s dominant electricity transmission company, Transelec, has an agreement with Endesa Chile and Colbun to build a transmission line for the projects. It also has had talks with Energia Austral, subsidiary of mining company Xstrata, which plans to invest US$600 million in the 600-MW Rio Cuervo hydro project in the Aysen Region. (HNN 6/1/07) Energia Austral has argued the proposed line should be open to all potential users.

The antitrust commission also insisted Endesa and Colbun should enter a consultation process before they bid for more water rights in the Aysen region. It also said HidroAysen must remain a publicly listed company.

HidroAysen told stocks and insurance regulator SVS on October 17 that an extraordinary shareholders meeting agreed to a capital increase of US$66.5 million. The meeting approved the issuance of 1,337,500 new shares of stock at a minimum price of 10,000 pesos (US$19.96) per share. (HNN 10/19/07)

The initial investment for the Aysen complex was estimated at US$4 billion, but subsequent modifications, including a reduction in the planned inundation, increased that estimate. (HNN 8/10/07)

The project has faced opposition from environmental and community groups who say it would spoil the natural areas in Chile’s mountainous and remote region of Patagonia. U.S.-based International Rivers Network said it is preparing a campaign against the project, possibly targeting Chilean copper, fruit, and forestry products in North American and European markets.

HidroAysen proposed a reduction of 36.5 percent in the surface area of the reservoirs for the project, saying it “would maintain the generating capacity by maximizing the hydro resources available in the area, reducing the height of the dams, and building five power plants.” The company indicated the reservoir reduction was possible because the complex now would use five smaller plants, rather than four larger ones originally proposed.

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