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Endesa España confirms Ralco dam commitment September 20, 1999
Endesa España (EE), the giant Spanish energy conglomerate which earlier this year took control of Chilean energy firm Endesa Chile, officially confirmed late last week its intentions to go forward with the controversial 570 MW Ralco Dam hydroelectric project. A company spokesman had said earlier this month that the Ralco project was "under review," sparking speculation that the new owners might abandon the project. Approximately US$130 million of an estimated construction cost of US$540 million has been spent thus far, and a Chilean judge earlier this month ordered suspension of all construction activities as a result of a lawsuit brought by the dam's opponents. The huge dam is the second of a series of dams proposed for construction on the Bio Bio River to assure Chile's energy requirements into the next century. Opponents, however, say the arrival of cheap natural gas from Argentina changes the economic need and viability of additional hydroelectric power. They further argue that local indigenous cultures will be destroyed as a result of the dam's construction, as will eco-tourism development possibilities. The Bio Bio is renowned in sporting circles as one of the world's top kayak and float-trip rivers. While Ralco's construction has generated temporary jobs for 1,500 locals, including 240 Pehuenche indigenous people, not all of the 100 indigenous families that would be displaced by the dam's reservoir have agreed to property swap proposals made by the energy company. Chile's indigenous peoples law, passed in the early 1990s and designed to respect community land arrangements unique to the indigenous culture, requires that all Pehuenche community members unanimously agree to the sale or swap of commonly held property before the land transaction may go forward. EE's efforts to secure community-wide approval for their project sparked tremendous controversy in the National Indigenous Peoples Board (Conadi), ultimately leading to the removal of two successive Conadi executive directors who found that the company had over-reached in its effort to secure the community-wide approval needed for the project. Commentators in Que Pasa magazine this weekend said EE had never seriously considered abandoning Ralco, suggesting instead that such hints were really a veiled threat aimed at Chile's energy regulation authorities, who are currently reviewing the tax structure for energy companies for the November 1999 to April 2000 time period. By threatening a delay in the project, and thus continuing Chile's vulnerability to energy shortfalls, EE hopes to force regulators to go lightly with proposed tax hikes. Que Pasa suggests the gambit has been successful, although regulators have yet to official announce the new tariffs. The magazine also says EE was delighted to have had the temporarily adverse court decision stopping dam construction. A force majeure intervention of this kind permits the company to back off of existing contracts without having to pay subcontractors and workers compensation. In related news, environmentalists, Pehuenche activists and "green bloc" national legislators traveled last week to Spain to lobby against the dam's construction and to file a lawsuit against EE, alleging that the dam's construction amounts to "genocide" for the Pehuenche culture.
Sources: El Mercurio, La Tercera Chip News Monti Aguirre |
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