Endesa to pay US$1.2mn for Ralco lands

Chilean generator Endesa (NYSE: EOC) has reached an 800mn peso (US$1.2mn) settlement with four indigenous families in a dispute over land rights for the US$570mn Ralco hydroelectric project, local newspapers reported. "We think the agreement is satisfactory for the families, for the country and for the company and its shareholders," Endesa's CEO Hector Lopez said, newspaper La Segunda reported. According to the settlement, each family will receive 200mn pesos and 77 hectares of land elsewhere, as long as they call off legal proceedings against the company within 20 days. The families must hand over their land deeds to the Inter-American Commission of Human Rights, which brokered the agreement, by October 17, the paper reported. The agreement comes after nearly a decade of wrangling between Endesa, which wants to flood the lands as part of its Ralco project, and the Pehuenche indigenous families. The Pehuenches say there are 14 families that should be compensated, and that the total payout should be 5bn pesos. Most Pehuenches accepted to sell or trade their lands with Endesa, but four families refused to do so, and in December 2002 they presented a case against the Chilean government to the Inter-American Commission of Human Rights. The families won a partial victory in May when a local judge ruled that construction was "irregular" because of the manner in which environment authority Conama approved the environment impact studies (EIS). In June, the same judge effectively froze construction by ruling that Endesa could not start filling the reservoir until it resolved the land issue. However, in late August a different judge threw out a lawsuit brought by the families claiming Endesa had purposefully flooded their lands in June. The judge ruled that the Biobio river in southern Chile broke its banks because of heavy rains and was not related to the Ralco project. The Ralco project, which is about 85% complete, is due to start operations in June 2004 and will generate about 3,100GWh annually.