Endesa’s HidroAysen Project Approved by Chilean Authorities Amid Protests

The HidroAysen project, designed to be Chile’s biggest power generator, was approved by a regional environment commission in the southern city of Coyhaique today.

Hundreds of protesters shouted and banged drums outside the building as 11 of the 12 commission members voted in favor of the project that Empresa Nacional de Electricidad SA and Colbun SA (COLBUN) want to build in the Patagonia region.

HidroAysen involves five dams and a 1,900 kilometer (1,180 mile) transmission line to feed the central grid that supplies Santiago and surrounding cities as well as copper mines owned by Codelco and Anglo American Plc. The government of President Sebastian Pinera says Chile needs more hydroelectric and coal- fired plants to meet demand that will double in the next decade and reduce power costs that are the highest in the region.

“We have to get that energy somewhere, independent of what the project is, because energy today is twice as expensive as in other Latin American countries,” Ena Von Baer, the government’s spokeswoman, told reporters in Santiago today before the vote. “We want to be a developed country, and to become so we need energy, especially cheap energy for the poor.”

Shares of Colbun and Endesa Chile rose 1 percent and 1.4 percent, respectively, in Santiago trading today as investors speculated on a favorable outcome in today’s vote.

With capacity to produce 2,750 megawatts, about 35 percent of the country’s current power consumption, the project would dwarf Ralco, Chile’s biggest hydro-generator at about 760 megawatts, on the Bio Bio River. The project’s owners plan to seek approval for the transmission line later this year.

Snow-Topped Mountains

Some protestors threw dirt and stones at the sports utility vehicle that brought the government’s regional representative Pilar Cuevas to the environment authority’s office today.

Non-profit group Patagonia Without Dams has erected billboards showing electricity pylons blotting a landscape of rugged snow-topped mountains and green fields sandwiched between Argentina and Pacific fjords.

“Here we don’t need all this energy that they are going to generate,” said Gloria Hernandez, an adviser to the Catholic Church in Aysen. “They are going to deliver it to the mining companies in the north.”

HidroAysen runs television adverts emphasizing the need for new energy sources by showing a floodlit stadium plunged into darkness during a soccer match. The project is clean, renewable and will bring jobs to the region, Michel Moure, HidroAysen’s head of operations, said today. At least a fifth of the workforce will be sourced locally, Moure told the commission.

Doubling Growth

Pinera, the billionaire entrepreneur-turned-politician who assumed the presidency in March 2010, is targeting average annual growth of 6 percent over his four-year term, double the average under the previous administration.

So far this year, authorities have granted Santiago-based Empresas Copec SA (COPEC) a permit to build a $500 million coal mine on a Patagonian island and approved Brazilian billionaire Eike Batista’s plans for a $4.4 billion thermoelectric plant. HidroAysen “would be good” for Chile, Interior Minister Rodrigo Hinzpeter told Duna radio station before the vote today.

“This government is going to take the bull by the horns and make the decisions that are required in the energy sector to ensure supplies in the long term,” Energy and Mining Minister Laurence Golborne said in a May 5 interview in Santiago.

Gabriel Silber, an opposition lower-house member, filed an injunction against the HidroAysen vote in a local appeals court on the grounds that some regulators have vested interests in the project. While the court allowed today’s vote to proceed, it may overturn the result, Silber told reporters from Coyhaique.

The government has put undue pressure on regulators to approve HidroAysen, Senator Patricio Walker of the opposition Christian Democrat party said at today’s commission meeting.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net or Matthew Craze at mcraze@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman@bloomberg.net

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