The President of global power group AES, Dennis Bakke has spoken of the potential for a $1-2 bn investment programme in its Chilean subsidiary Gener SA, it was reported yesterday. The planned growth relies upon changes in the country’s electricity laws being suitable to the company. A new bill is to be put before Congress seeking to overhaul Chile’s electric power sector.
The electricity law would call for the creation of an energy bourse where generators would sell power to distributors, and determine how prices are set, among other norms.
“We will invest $1-2 bn over the next three to five years. We are analysing projects on a case-by-case basis and we will also follow the electricity law’s progress in Congress, as some initiatives could become reality if the law is good,” Bakke said.
US based AES, acquired a majority interest in Gener in December 2000 having begun its strategic investment in the company the preceding April. The investment by AES in Gener was approximately $1.3 bn.
Gener is Chile’s largest producer of thermal electric energy. Prior to its participation in Gener, AES had already positioned itself as one of the largest electricity generating companies in Latin America.
The new investments will be both in the construction of additional production facilities and also the expansion of existing plants. Gener already plans to spend $60 million to raise generating capacity by 60 megawatts at one of its power plants.
The utility may also build a transmission line connecting Chilean and Argentine power grids, Bakke added.
Demand for power in Chile continues to grow while investments in the sector remain flat, and the government is concerned whether demands will be met in the coming years. Over 90 per cent of the Chilean population live within the boundaries of the Central Interconnected System (SIC) power grid, which is largely a hydroelectric concern.
In 1999, the worst drought of the twentieth century exhausted the SIC’s water reservoirs, forcing generators to ration electricity in the form of programmed power outages.
Although Gener is primarily a business focused on electricity generation, it also has a diverse range of energy interests including, steam generation, extraction and trading of coal, extracting and transportation of natural gas, oil exploration and utility engineering services.
The AES Corporation, which is headquartered in Arlington, Virginia, has a market capitalisation of $24.4 bn. Last year it reported profits of just over $1 bn from its activities in 23 countries around the world.