The executive secretary of Chile’s National Energy Commission (NEC), Maria Isabel Gonzalez, has defended NEC’s policy on hydro development amid growing controversy over the country’s 570MW Ralco dam and hydro power project.

Gonzalez said that hydroelectric development is needed in Chile as a more economic form of alternative energy is not available.

She pointed out that the average cost of energy generated by a hydro plant generator is US$0.019 per kWh, while that of thermal plants is US$0.036 per kWh. In comparison, Gonzalez said, the cost of electricity produced by natural gas costs an average of US$0.021 per kWh.

Chile’s hydro policy has been coming under fire from environmental groups who oppose the six dams to be built on the Bio Bio river.

Recently opposition has focused on Ralco dam and the Pangue dam, both of which are located on stretches of the river in southern Chile.

Early last year the World Bank withdrew its funding of US$150M for the Pangue dam due to opposition from environmentalists and native groups.

An internal inquiry by the Bank allegedly found that Pangue did not satisfy some of the institution’s social and environmental requirements for project financing.

However, the inquiry also found the social and environmental impacts of the dam to be small.

The 5200km2 water spread of the Ralco dam reservoir submerges areas occupied by about 500 Pehuenche Indians. Endesa, the Chilean utility developing the project, has offered to pay compensation to relocate the Indians but some of the tribe have refused to leave.

Opposition to the project has escalated with the Pehuenches and environmental groups staging protest marches and hunger strikes.

Amidst protests Chile has dismissed the head of the Commission Administering Indigenous People (Condai), which is to rule on whether relocation can take place. Chile’s law on Indian lands prohibits their sale and only allows land swaps approved by Condai. However, the energy act allows the development of projects that benefit the country.

Ralco dam, to be built about 20km from the southern town of Los Angeles, has already received environmental clearance from NEC’s EIA group Conama, and is expected to come on line in the first half of 2002.