Eventual failure to meet construction milestones would restrict the inflow of new resources. Firm seeks to move the project forward.

AES Gener ratifies the viability of Alto Maipo, despite rumors of a bank freeze

Alto Maipo at risk? Speculation is growing regarding the viability of AES Gener’s project located in San José de Maipo, which seeks to inject 532 MW into the electricity system. In addition to the departure of the Luksic group after the announcement of cost overruns, there was also arbitration with its contractor CNM, in charge of building part of the tunnels, and an eventual freezing of bank financing due to a delay in its letter gantt. With regard to the alleged resource stagnation, which was raised this morning on T13 Radio, sources at the company ruled out that the bridges with the banks have been cut, as they said that there is an approved financing plan.

Last March, AES Gener sent an essential fact to the Superintendency of Securities and Insurance (SVS), stating that the project will cost US$ 2,500 million, 22% higher than its initial projection (of US$ 2,050 million), and that the partners and financiers have already committed their participation in the project. “The financial restructuring contemplated, among other aspects, the acquisition by AES Gener of all of Minera Los Pelambres’ (MLP) stake in Alto Maipo SpA (Alto Maipo); the incorporation of Strabag SpA, the project’s main contractor, as a minority shareholder with a percentage of approximately 7%; the modification of the energy supply contracts signed by Alto Maipo and AES Gener with MLP; and the modification of the terms and conditions of the current senior project financing,” the company reported.

However, concern in the power company led the main executives of the Chilean subsidiary, including CEO Javier Giorgio and its vice-president of finance Ricardo Falu, to meet with executives of AES’s parent company in the United States to provide details of the project, which today is almost 60% complete.
Regarding possible delays due to the termination of the contract with the contractor CNM, with which it is in arbitration, AES Gener told Diario Financiero that it signed a contract with Robbins Chile, assuming the tunnel works in the El Yeso sector.
According to the publication, AES Gener is negotiating with Strabag, the other contractor for the project, to enable this type of work. The idea would be to extend the contract with the Austrian firm that also has a stake in the project.

Electricity market would not suffer: Experts warn of a limited impact

The possible postponement or stoppage of the Alto Maipo project for financial reasons would have a limited impact on the electricity market, according to industry experts. “It would mean that Gener would have to renegotiate some contracts and would probably not be able to supply Antofagasta Minerals, as it has planned,” says Rodrigo Jiménez, general manager of Systep. “Now, in terms of marginal costs, that would affect Gener because it is a hydroelectric energy project, which is cheaper than thermal energy, but that is an internal company issue,” he adds. Jiménez explains that Gener has a portfolio of power plants to supply its contracts with distributors, so there should not be an effect on a market with ample supply. The manager expresses his doubts that the project will fall through. “Although Alto Maipo has had some setbacks in terms of investment costs, there is already a significant investment and I see it as difficult to abandon it, perhaps it will be postponed or sold to a third party, but I see it as difficult not to do so,” he reasons.
The partner of another consulting firm, who prefers not to be named, said that although no calculations have been made on the possible impact on the market if the project falls, “I have the feeling that it would not affect it much”.