Credit ratings agency Fitch said that Chilean power group Compania General de Electricidad's (CGE) move into hydro power could increase business risk in its energy activities.
Working through its subsidiary CGE Generacion, the power group is initially investigating development of the 136MW Nuble scheme. The run-of-river project has an estimated cost of US$185M and construction is expected to take approximately three years.
While noting that regulatory risk was moderate for the near term, the agency felt that indebtedness associated with developing Nuble plus business risk rising in the energy portfolio as the resource mix expanded were reasons to anticipate pressure on credit quality.
CGE has water rights to develop 400MW of hydro potential in Chile, Fitch noted. The power group is looking to develop the hydro potential through CGE Generacion. The Nuble project would be the first hydro scheme for the subsidiary.
Fitch commented on the hydro power plans when issuing its affirmation of credit ratings for CGE on local and foreign currency issuer default ratings. It added that the outlook in those areas was stable given the stability and diversification of the Chilean energy sector.