* Chile looking to boost power generation
* Chile grid fragile after years of under investment
(Updates with analyst comments, share price at close)
By Erik Lopez
SANTIAGO, Oct 6 A Chilean appeals court lifted
a suspension order on Thursday that will allow work to proceed
on the $3.5 billion HidroAysen hydropower project, which aims
to prevent energy shortages.
The project has been the target of massive protests due to
alleged environmental concerns.
The appeals court in the southern city of Puerto Montt had
issued the suspension order in June after legal injunctions
filed by opponents of the project. The court revoked the
suspension order in a ruling published on Thursday and seen by
"This appeal sort of maintained Hidroaysen in standby, as
environmental authorities had already given the green light to
the construction of the power stations," said Carlos Ferruz, an
energy analyst with Corpbanca. But approval of the transmission
line is still pending-- and may be even trickier to obtain,
according to Ferruz.
HidroAysen is a joint venture between leading generator
Endesa Chile END.SN and partner Colbun COL.SN, which will
comprise five power stations and plans to generate 2,750
megawatts by damming two major rivers.
Chile, the world's top copper producer, is seeking to boost
and diversify its power grid to confront rising energy needs
and drought-induced energy shortages, which this year prompted
the government to reduce voltage to help avoid blackouts.
Only late last month, a massive power blackout disrupted
crucial copper mines in Chile and darkened vast swaths of the
Environmentalists say the hydroelectric dams will wreck
pristine valleys and rivers in Patagonia, while industry
players argue the project is crucial to the power-starved
country, which is also grappling with a creaking grid in the
wake of a devastating earthquake early last year.
TAKE-A-LOOK-Chile struggles with creaking grid[ID:nS1E78P1CA]
FACTBOX on the project: [ID:nN09253626]
Shares in Endesa closed 3.26 percent firmer on Thursday,
while Colbun rose 5.3 percent, both surging in tandem with a 5
percent rally by the wider IPSA blue chip index .IPSA on the
heels of global stock market gains.
The project still requires a permit for a more than
1,250-mile (2,000-km) transmission line to carry the 2,750
megawatts generated from deep in southern Patagonia to the
HidroAysen could be holding off to see if the Chilean
government proposes a revamp of the south's fragile
transmission line, that the project could eventually connect to
as opposed to constructing its own line. A HidroAysen
transmission line is seen costing up to $4 billion.
Corpbanca's Ferruz estimates investment in the power
station reaching up to $5.5 billion, significantly above
Approval of the HidroAysen project by Chile's regional
environmental commission earlier this year was seen helping
deeply unpopular President Sebastian Pinera regain the trust of
energy investors after he struck down a thermal project over
environmental concerns last year.
Some see the approval of HidroAysen paving the way for
other controversial energy projects.
In February, regulators approved the environmental study
for the $4.4 billion coal-fired Castilla thermal power plant
planned by Brazilian billionaire Eike Batista.
Quake-hit Japan's nuclear crisis doused nuclear power
ambitions in Chile, one of the world's most seismically active
countries, which was devastated last year by a massive
earthquake and ensuing tsunamis.
(With reporting by Alexandra Ulmer, Writing by Simon Gardner;
Editing by Marguerita Choy)