Colbun Is Open to Selling Patagonian Power Project Stake

Colbun SA (COLBUN), a partner in what would be Chile’s biggest power plant, said it would be prepared to sell a stake in the Patagonian hydroelectric project after delaying development plans amid environmental opposition.

Colbun, a 49 percent shareholder in HidroAysen, doesn’t plan to restart work on the 2,750-megawatt project until it sees greater consensus among lawmakers, Chief Executive Officer Ignacio Cruz said in an interview yesterday.

“You really don’t have a project until you have a solid base of social support,” Cruz said from his offices in Santiago. Selling a stake to a third party “could be a good alternative,” if it helps make the project viable, he said.

Colbun announced in May that it wanted to indefinitely suspend plans to seek environmental permissions for the project’s transmission lines. Environmental opposition also stalled projects being developed in Chile by Brazil’s MPX Energia SA (MPXE3) and GDF Suez. (GSZ)

The lack of consensus over Chile’s power crunch may stunt economic growth in the coming decade as copper mining projects are delayed because of a lack of cheap energy, Cruz said.

HidroAysen involves building a 1,900-kilometer (1,180-mile) transmission line to Chile’s capital Santiago. Empresa Nacional de Electricidad SA, known as Endesa, owns the remaining 51 percent of the project.

Price Volatility

Endesa may also face delays to its recently-approved Punta Alcalde coal-fired power project in northern Chile as environmentalists seek an injunction against the project, Cruz said. While opponents have the right to take their case to court, Punta Alcalde meets the highest environmental standards, Endesa Chairman Jorge Rosenblut said in an interview published today in Diario Financiero.

Chile will suffer “high and volatile” power prices for a “long time,” Cruz said. A reduction in reservoir levels will lower hydroelectric power generation in the first half of 2013 and increase the cost of electricity as energy companies burn more diesel to supply the grid, he said.

Colbun expects to consolidate its investment grade credit rating as it generates cash at similar levels to the third quarter when earnings before interest, taxes, depreciation and amortization totaled $114 million, Cruz said.

The company’s shares, little changed in Santiago trading today, have gained 3.3 percent in the past year compared with the Chilean benchmark index’s 0.6 percent decline.

To contact the reporter on this story: Matt Craze in Santiago at mcraze@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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