Pacific Hydro, SN Power sign La Higuera JV

Australian power generator Pacific Hydro (ASX: PHY) signed a joint venture agreement earlier this month with Norway's Statkraft Norfund Power Invest ( SN Power) for the development of the La Higuera hydro project on central Chile's Tinguiririca river, the companies said in separate statements. The first stage is the US$170mn, 155MW La Higuera project, and the second stage is the 145MW La Confluencia project, which is expected to follow within 2-3 years. SN Power and Pacific Hydro will each own 50% of the first stage, which is expected to reach financial close and start construction in late 2004, the statements said. On completion in January 2008 it will supply an average of 840GWh a year to Chile's central grid SIC. Pacific Hydro made the decision to enter into the joint venture agreement in order to benefit from SN Power's experience in hydropower development and to better position the company for future project developments, Pacific Hydro's managing director Jeff Harding said. "The joint venture allows us to focus on the two significant hydro projects we already have operating in Chile: the Coya and Pangal projects that we recently acquired from [state copper corporation] Codelco," Harding explained. La Higuera will take its water from snowmelt, glacial melt and rainfall. River flows are "seasonally consistent and reliable and have been increasing over the past 25 years from the impact of global warming," the statements said. Recent gas shortages in Argentina have affected Chilean power generation, and there is now considerable pressure for the development of new hydro generation in Chile against a background of rising electricity prices. La Higuera and La Confluencia projects are now both included in the official Chilean power generation expansion program. "We look forward to cooperating with Pacific Hydro in the development of La Higuera hydro. La Higuera is our point of entry to the growing Chilean market. The project will contribute to meeting the future energy needs of Chile with environmentally friendly power and further economic growth and development," SN Power CEO Oistein Andresen said.