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Authorities Set To Vote On Chile HidroAysen, Long Road Remains


By Anthony Esposito



SANTIAGO -(Dow Jones)- The giant HidroAysen hydroelectric project is nearing a pivotal moment as Chilean environmental authorities are expected to finally vote on its generation units by mid-May, but the controversial project's future will also depend on approval of the planned transmission line.

The $3.2 billion project--a joint venture between Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and Colbun SA (COLBUN.SN)--will be Chile's biggest in terms of installed capacity if approved.

With Chile looking to double its current installed capacity of 15,000 megawatts over the next decade to keep up with demand, "HidroAysen could cover nearly 20% of the needed expansion," HidroAysen chief executive Daniel Fernandez told Dow Jones Newswires. On Tuesday, HidroAysen answered the last questions authorities posed, nearly three years after handing in the environmental impact study for the generation project.

"We've done everything that was asked of us...and the project will meet world-class standards," Fernandez said.

HidroAysen has faced staunch opposition because of plans to lay a transmission line that would span nearly 2,000 kilometers through pristine land and plans to dam the Baker and Pascua rivers.

If authorities approve the five-unit, 2,750-megawatt generation project, the company expects to hand in the transmission line's environmental impact study by year-end.

"The permitting process for the transmission line shouldn't take as long as it did for the generating units because the transmission line is much simpler from a technical standpoint," Fernandez said.

Even if environmental approval is quicker, getting permission from the countless landowners where the transmission line would need to pass through could drag on. Obtaining permits and land usage rights for transmission lines is notoriously sluggish.

"It can take up to five years, and it usually does, to build a transmission line whether it's 10 or 400 kilometers long...getting land usage rights and environmental approval alone takes about four years on average," said Juan Carlos Araneda, the head of electrical systems development at Chile's main power-transmission company, Transelec SA.

HidroAysen is considering bringing in a partner to develop the transmission line, which analysts say could more than double the project's overall price tag.

"The most likely scenario is that [we'll] look for a strategic partner for the transmission line," Fernandez said.

HidroAysen and Chilean power generator Energia Austral Ltda., a subsidiary of global diversified mining company Xstrata PLC (XTA.LN) have discussed a joint transmission line. Energia Austral has three hydroelectric projects in its pipeline, also in the southern Aysen region, and needs a transmission line to get the electricity to consumers further north.

Construction on HidroAysen's first unit is expected to begin by the end of 2014 and be complete in 2019. The last generating will likely come online in 2025.


-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929;


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(END) Dow Jones Newswires

April 15, 2011 08:44 ET (12:44 GMT)

Copyright (c) 2011 Dow Jones & Company, Inc.

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