E.CL Falls After Postponing Northern Chile Power Project

E.CL SA (ECL), northern Chile’s biggest power producer, headed for the biggest weekly drop in a year after its top executive told El Mercurio that the company is delaying a new plant as copper producers delay projects.

The shares retreated 2.6 percent to 811 pesos at 3:13 p.m. in Santiago, extending a weekly decline to 5.5 percent. The 90-day volatility, a measure of price swings, rose to 21.3, the highest since March 2012. Chile’s benchmark Ipsa (IPSA) index fell 0.8 percent.

E.CL, the local unit of France’s GDF Suez (GSZ), will delay building its 750-megawatt Energetica Mejillones plant because it hasn’t secured contracts with raw-material producers to justify the $1.5 billion cost, Chief Executive Officer Lodewijk Verdeyen said in an interview with El Mercurio. Mining companies have been delaying copper projects amid an economic slowdown in China and scarcity of water in northern Chile, Verdeyen told the Santiago-based newspaper.

“The uncertainty about the project is pressuring the stock and creating short-term volatility,” Marcelo Catalan, an analyst at Banco de Credito e Inversiones (BCI) said by phone from Santiago. Catalan, who rates E.CL the equivalent of hold, said the shares are “overly punished” because he isn’t including cash flow from the Mejillones project in his valuation model.

E.CL has fallen 27 percent in 2013, the worst performance among electricity companies in the IPSA, which is down 11 percent this year.

Beatriz Monreal, head of corporate communications at E.CL, said by e-mail that the information El Mercurio published was accurate.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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