MAC: Mines and Communities

Chile says no to $8bn hydroelectric project in Patagonia

Published by MAC on 2014-06-12
Source: Reuters,, IPS

Previous article on MAC: Mining and the Chile Effect

Chile rejects HidroAysen, hydro power project can appeal

Felipe Iturrieta and Alexandra Ulmer


10 June 2014

SANTIAGO - A special Chilean ministerial committee on Tuesday canceled the massive HidroAysen hydro-power project's permit, after environmentalists protested it would wreck pristine valleys in Chile's wild south.

While the decision is a big blow to the controversial project, it is not deadly. HidroAysen can still tweak the project or take its case to courts, suggesting more bitter legal wrangling over the fate of the 2,750 megawatt project may still be ahead.

Still, the $8 billion-plus project faces a steep uphill battle if it decides to fight on in court.

"Although the project isn't formally dead the litigation strategy has become a lot harder for the company now," said Luis Cordero, law professor at the Universidad de Chile, who estimated a fresh legal battle would yield a final decision in about a year.

The HidroAysen joint venture, made up of leading generators Endesa Chile and partner Colbun, was not immediately available for comment.

Some industry observers said the companies, exhausted by so many legal battles, may tweak the project to make it more environmentally and socially acceptable, before re-submitting it to authorities.

Potential modifications could include changes of ownership or design of the complex, for instance a scaling down to four dams instead of five, said energy analyst Sergio Zapata of Corpgroup.

Polemic Patagonia Project

"This project has many aspects that were poorly thought out," said Energy Minister Maximo Pacheco, at the end of a three-hour meeting to discuss the project.

Anti-HidroAysen protesters outside the ministry building hugged each other and popped champagne when the announcement was made.

Unpopular HidroAysen is a political hot potato for center-left president Michelle Bachelet, who started her term in March.

World No. 1 copper producer Chile is facing an energy crunch just as environmental activists gain more traction in battling what they call excessively large and disruptive power projects.

Rejecting the project will boost moderate Bachelet's green credentials, and likely help her gain support from a key senator from the southern Aysen region who essentially conditioned his support for her reforms on axing HidroAysen.

Insufficient provision had been made for those who would be displaced and the quantification of damage to the environment and wildlife was inadequate, said Environment Minister Pablo Badenier as he announced the decision.

Supporters of the project call the massive complex an environmentally friendly way to meet the Andean country's soaring energy needs.

Power-dependent miners in Chile will be especially dismayed by the decision. Bachelet is eyeing liquefied natural gas (LNG) and renewables to fight the looming power woes.

A series of other energy and mining projects have been blocked due to concerns about damage to water, health, indigenous communities and glaciers in the Andean country.

Experts blast a nebulous regulatory framework for letting projects to sink into legal limbos, sometimes for years, exasperating environmentalists and companies alike.

(Additional reporting by Fabian Cambero.; Editing by David Gregorio)

Chile says no to $8bn hydroelectric project in Patagonia

Cecilia Jamasmie

11 June 2014

Chilean ministers unanimously voted Tuesday to revoke the environmental permit of the HidroAysen mega-dam in Patagonia, which would have tamed two of the world's wildest rivers and built more than 1,600 kilometers of power lines to supply energy to central Chile.

After a three-hour meeting, the country's ministers of agriculture, energy, mining, economy and health decided to "side with complaints presented by the community" and pull the plug on the hydroelectric project, environment minister Pablo Badenier was quoted as saying by local newspaper La Tercera (in Spanish).

The decision handed a victory to environmentalists who praised it as a landmark moment. The companies behind the project, Spain's Endesa and Chile's Colbun have 30 days from the moment they are officially notified of the decision to appeal the ruling, but experts believe it would be a very difficult obstacle to overcome.

"This project has many aspects that were poorly thought out, especially aspects related to local communities," Energy Minister Maximo Pacheco told reporters after the meeting (in Spanish).

Endesa and Colbun can still tweak the project or take its case to courts, which suggest more legal battling over the fate of the controversial project, which has triggered worldwide protests, may still be ahead.

Chile, the world's top copper producer, suffers from a chronic energy shortfall that has begun affecting the competitiveness of its mining sector and cramping economic growth.

Experts say Chile needs to triple its current 18,000-megawatt capacity in the next 15 years, but the nation lacks domestic oil or natural gas resources. The dams were planned to generate a total of 2,750 megawatts, almost a third of central Chile's current needs, within 12 years.

Chile's Patagonia Celebrates Decision Against Wilderness Dams

By Marianela Jarroudl

Inter Press Service (IPS)

11 June 2014

SANTIAGO  - The Chilean government rejected Tuesday the controversial HidroAysén project for the construction of five hydroelectric dams on rivers in the south of the country. The decision came after years of struggle by environmental groups and local communities, who warned the world of the destruction the dams would wreak on the Patagonian wilderness.

"This is a historic day," Juan Pablo Orrego, the international coordinator of the Patagonia Without Dams campaign, told IPS after the decision was announced.

"I am moved that the citizens - because this was a victory by the citizens - managed to finally inspire a government to do the right thing in the face of a mega-project," he added.

The decision was reached after a three-hour meeting by a committee of ministers of the government of socialist President Michelle Bachelet, who took office for a second term in March.

The committee, made up of the ministers of environment, energy, agriculture, mining, economy and health, unanimously accepted the 35 complaints presented against the project, 34 of which were introduced by communities and others opposed to the initiative and the last of which was presented by the company itself.

The decision took six years to arrive, after a number of legal battles. And in response to the announcement people took to the streets in Patagonia, a wilderness region in southern Chile, to celebrate.

"This ministerial committee has decided to accept the complaints presented by the community, by the citizens, and annul the environmental permit for the HidroAysén project," Environment Minister Pablo Badenier told reporters, declaring that the dam had been rejected by the government.

The company, owned by Italian firm Endesa-Enel (which holds a 51 percent share) and Chile's Colbún, has 30 days to appeal the resolution in an environmental court in Valdivia, in southern Chile.

During the election campaign, President Bachelet had stated that the dams were not viable.

In May, when her administration unveiled its energy agenda, she said she would promote renewable unconventional energy sources and the use of natural gas, in contrast with the plan of her predecessor, Sebastián Piñera (2010-2014), which favoured hydropower.

The HidroAysén project, presented in August 2007, was to involve the construction of five large hydroelectric dams on the Baker and Pascua rivers in Patagonia. But the following year, 32 of the 34 public agencies called on to pronounce themselves did so against the project.

Environmental groups, with the support of some government officials, have proposed UNESCO world heritage site status for the southern region of Aysén, where the dams were to be built some 1,600 km south of Santiago. Patagonia is not only biodiverse but is also one of the biggest reserves of freshwater in the world.

The dams would have flooded a total of 5,910 hectares of wilderness, for a total capacity of 2,750 MW for the national grid (SIC).

Chile has a total installed capacity of 17,000 MW: 74 percent in SIC, 25 percent in the great northern grid (SING), and the rest in medium-sized grids in the southern regions of Aysén and Magallanes.

The project also included a 1,912-km power line, the longest in the world, which was to run through nine of the 15 regions of this long narrow South American country.

Energy Minister Máximo Pacheco said the HidroAysén project "suffers from serious problems in its execution because it did not treat aspects related to the people who live there with due care and attention."

He added that as energy minister "I have voted with complete peace and clarity of mind with respect to this project."

Pacheco also said "the decision that was reached today does not compromise in the least the energy policy that we have designed in the energy agenda, but specifically refers to one project."

Orrego, the environmentalist, said the decision against the construction of the HidroAysén dams "points to the end of the era of the thermoelectric and hydroelectric energy mega-projects - an era that in the developed countries ended a long time ago."

Chile imports 97 percent of its fossil fuels and its energy mix is made up of 40 percent hydropower and the rest of polluting fossil fuels, used in thermoelectric plants.

The fact that Chile lacks domestic oil and natural gas means the cost of producing electricity per MW-hour is among the highest in Latin America - over 160 dollars, compared to 55 dollars in Peru, 40 in Colombia and 10 in Argentina.

The executive director of the association of electric companies (ASEL), Rodrigo Castillo, said on Tuesday that the resolution "refers to one project in particular and does not make it impossible to use hydrological resources in southern Chile in the future."

But René Muga, the head of the association of power plants (AGG), said HidroAysén represented 40 percent of the energy needed by the country in the next 10 years, equivalent, according to his figures, to what seven or eight coal-fired plants would produce. "That energy is really necessary," he argued.

Orrego said the Bachelet administration's decision could bring it "very powerful political consequences."

"It is a brave move," the environmentalist said. "But it was inspired by the citizens, of that we have no doubt."

"These many years of struggle have culminated in this resounding victory for the citizens," Orrego added.

The Patagonia Without Dams campaign waged by a coalition of environmental and citizen groups and led by Orrego and prominent environmentalist Sara Larraín managed to mobilise the entire country against the HidroAysén project and drew international attention to the planned wilderness dams.

In opinion polls, three-quarters of respondents have said they were opposed to the dams. And in early 2011, more than 100,000 people took to the streets against HidroAysén.

Orrego, who won the Right Livelihood Award in 1998, expressed his gratitude to Chile, "because this campaign was carried out by the entire country."

He also acknowledged the participation of "allies" in other countries, such as Argentina, Belgium, Italy and Spain.

In the Aysén región, critics of the project waited in a local cinema for the announcement of the ministerial committee's decision, before marching through the streets of Coyhaique, the regional capital, to celebrate.

Patricio Segura of the Citizen Coalition for the Aysen Life Reserve told IPS that the government's decision "was the right thing in terms of sustainability and the construction of the energy mix that we as a country deserve."

"We hoped President Michelle Bachelet's political commitment would be fulfilled, as well as the duty to set aside an irregular project that advanced due to lobbying and pressure," he added.

Segura said the project "generated tremendous polarisation in the Aysén region," and he complained that "they managed to divide the people of Aysén without even laying one brick."

As a result, he said, this decision lays the foundation "for us to sit down in Aysén and discuss what really matters, which is the Aysén Life Reserve."

"Now we have to discuss a sovereign and sustainable energy mix for the Aysén region, including our region's abundant water resources and wind energy," he added.

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