UPDATE 2-HidroAysen's fate deferred to Chile's president-elect

Thu Jan 30, 2014 2:25pm EST

* Chile committee orders more studies on project

* Controversial HidroAysen remains in limbo

* Center-left Bachelet says project not viable as is

SANTIAGO, Jan 30 (Reuters) - A special Chilean ministerial committee said on Thursday that more studies of Patagonian energy project HidroAysen were needed, essentially deferring the final decision on whether it should proceed to incoming President Michelle Bachelet.

The 2,750 megawatt hydropower joint venture between leading generator Endesa Chile and partner Colbun, a political hot potato, has been in limbo for months, much to the frustration of both investors and environmentalists.

Center-left Bachelet has called the $8 billion-plus project "unviable" as it stands, suggesting it could be rejected once she takes office on March 11.

HidroAysen said in a statement it was awaiting "clear information" from authorities before issuing an opinion.

Opponents, who slam the venture's plans to flood large swaths of unspoiled land and say it would hurt the environment and tourism in the pristine Southern region, brought the approved project to the ministerial group for review.

The requested additional studies could take up to a year to be ready, the head of the SEA environmental evaluation service Ricardo Irarrazabal said.

"The government of President Sebastian Pinera astutely doesn't want to pay the political cost of building HidroAysen," said energy specialist Raul Sohr, who wrote an influential book about Chile's energy woes.

"HidroAysen isn't completely dead, but costs will rise as construction is delayed and demands are piled on. In the end, it could be economic calculations and not political protests that bury it."

Still, others in the market say tinkering with the project could redeem it at a time when energy-strapped Chile is craving fresh generation.

"The project isn't dead," said Sergio Zapata, senior energy analyst with CorpGroup.

Tweaks, which could for instance include subsidizing power in the remote Aysen region, could render the investment viable once again, he said.

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