UPDATE 1-Reuters Summit-Rain to decide if Chile rations power

(For other news from the Reuters Latina America Investment Summit, click here)(Updates with fresh quotes, details throughout)

By Monica Vargas

SANTIAGO, March 31 (Reuters) - Chile has avoided energy rationing so far, but winter rains will dictate whether or not the government will have to resort to it, Energy Minister Marcelo Tokman said on Monday.

Chile will likely overcome an energy squeeze in 2010-2011, thanks to the implementation of various energy projects under construction, Tokman told a Reuters Latin America Investment Summit in the Chilean capital Santiago.

"If it does not rain this winter, we will be in a very tight situation," Tokman said, referring to low water levels in hydro-electric reservoir amid a severe drought. Chile is also suffering from lower gas imports from neighbouring Argentina.

"If the drought continues ... diesel consumption will be higher than last year," he added, without giving further details.

Measures like cutting power voltage by up to 10 percent and a national energy-saving awareness campaign helped reduce consumption in the second half of March by more than the industry expected, he said.

"All of the measures the government adopted were fairly effective," said Tokman, who was appointed a little over a year ago in the middle of one of the worst energy crises Chile has faced.

"The truth is without this reduction in consumption ... it would have been very, very difficult to avoid power cuts in March," he added. "April looks to be much calmer than March, and now May, June and July will depend on how dry the year is going to be.

One of the worst droughts in decades coupled with reduced gas imports from Argentina and high diesel generator running costs have combined to raise the spectre of possible rationing.

"If there is no unexpected breakdown during April and May, we should be in a tight situation but we shouldn't have to ration unless something happens. Beyond May, it depends crucially on the climate."

The government and private firms are forging ahead with a series of projects in a bid to diversify the country's energy supply, which depends on natural gas supplies from Argentina -- which last year made the deepest supply cuts since 2004.

Authorities have approved power projects to generate 4,778 megawatts, of which more than 50 percent will be from coal. Projects to generate another 5,206 megawatts are also being studied.

Two of the biggest projects the government is behind are gas plants, which will be ready in 2009 and 2010.

Tokman ruled out the construction of a third liquefied natural gas plant for the moment, saying the capacity of the two under construction could be expanded. (Writing by Simon Gardner, editing by Richard Chang)