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UPDATE 1-Poor regulations jeopardize HidroAysen-Chile's Colbun
May 31, 2012 / 12:15 AM / in 5 years

UPDATE 1-Poor regulations jeopardize HidroAysen-Chile's Colbun

By Alexandra Ulmer

SANTIAGO, May 30 (Reuters) - Chilean power company Colbun warned on Wednesday that unclear regulations are an obstacle for its embattled HidroAysen mega hydro power joint venture and that its board has recommended suspending transmission line impact studies.

The 2,750 megawatt, $3.2 billion HidroAysen complex, one of power-starved Chile’s biggest energy projects, has faced an uphill battle against public opinion as environmental and social groups in Chile, the world’s top copper producer, increasingly oppose power and mining developments.

HidroAysen, which is majority owned by Chilean energy generator Endesa, said later on Wednesday its board would study the recommendation and that development of its five-dam project is continuing as planned.

“As long as there is no national policy that counts with broad consensus and provides the energy guidelines that this country needs, Colbun feels the conditions to develop energy projects of this scale and complexity aren’t met,” Colbun said in a statement to Chile’s regulator.

It said its board had recommended suspending the impact study for the transmission line indefinitely, sounding a warning shot to the government.

“It will be the mission of executive and legislative powers to reach a consensus on the regulatory and institutional changes necessary to make viable the generation and transmission projects Chile’s economic and social development demands.”

Colbun is open to adapting the HidroAysen project, the firm added.

HidroAysen wants clearer regulations and clarity about state plans to build a public transmission line, which the project’s executive vice president told the Reuters Latin American Investment Summit on Tuesday was “an area of uncertainty”.

The project has faced opposition from environmentalists who say it will spoil swaths of pristine Patagonia.

Miners and energy firms in Chile in turn have been increasingly vocal over what they say is an unclear regulatory framework that has resulted in environmentally approved projects being delayed, suspended or terminated in the courts.

Chile’s power matrix has a capacity of 17,000 megawatts and the government aims to add another 8,000 megawatts by 2020, but several major projects have faced legal delays.

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