Development & Aid, Economy & Trade, Energy, Environment, Global Governance, Headlines, Latin America & the Caribbean

CHILE: Drought Raises Likelihood of Energy Rationing

Cecilia Vargas

SANTIAGO, Feb 15 2008 (IPS) - The severe drought affecting Chile has caused an agricultural emergency in 50 rural districts in the centre of the country, and large sectors of the economy are concerned about possible electricity rationing in March.

The “La Niña” climate phenomenon has over half the country dangling by a thread. Persistence of cold water in the Pacific ocean and high atmospheric pressure are preventing rain-bearing fronts from entering central and southern areas.

Last year the weather was cold, but rainfall was scanty. Consequently, the water levels at hydroelectric dams are at an all-time low.

In addition, one of the largest hydroelectric power stations, owned by the Colbún company, is out of service due to a fire late last year. The Nehuenco power plant will not be contributing its 370 megawatts to the central grid (SIC) again until mid-2008.

The government of President Michelle Bachelet has invested about 12 million dollars in the 50 farming districts where the emergency has been declared. Bales of forage have been delivered to small ranchers, and water for human consumption to water containers or by tanker-truck.

Use of techniques to improve irrigation has been fomented by public contests, veterinary care has been provided for under-nourished livestock, and emergency vouchers have been distributed to small farmers.

One of the hardest-hit areas is Colina, 27 kilometres north of Santiago, where the production of fresh produce has declined owing to the prohibitive cost of irrigating.

“Farmers have to irrigate their fields with well water, so the cost of the electricity used for pumping the water has made production more expensive,” Mayor Mario Olavarría told IPS.

“A special subsidy from the national government is needed to deal with the huge electricity bills these small-scale farmers have to pay to irrigate a hectare of tomatoes or lettuce,” he said.

The mayor’s office sends a tanker truck three times a week to provide drinking water for the people living in the north of Colina.

The situation is much the same from Coquimbo, a region north of Santiago, down to Araucanía, in the south of Chile, because this time the southern area where cereals, beetroot and beans are grown has also been hit by the drought, threatening production.

Energy Minister Marcelo Tokman has announced a series of measures to avoid having to ration energy in March.

The government is faced with the dilemma of needing to save energy, and wanting sustained economic growth. Electricity rationing would have serious consequences for industry and investments in the country.

In 1999, the government of Christian Democratic President Eduardo Frei, which like that of socialist President Bachelet, belonged to the centre-left Coalition of Parties for Democracy, decreed electricity rationing in eight of the country’s (then) 13 regions, on another occasion when the important Nehuenco power station was out of commission.

Now Bachelet has ordered a voltage reduction, from 220 to 210 volts, and has extended use of daylight saving time until Mar. 29 instead of changing over on Mar. 8, as previously scheduled. She has also authorised flexibilisation of the water use contracts at the El Laja and Maule dams, so that hydroelectric output can be maximised.

The government measures have met with mixed reactions from producers. While the National Agricultural Society was unwilling to comment, the National Chamber of Commerce issued a press communiqué saying that it “approves of the (government’s) instructions and supports the measures adopted.”

Héctor Castillo, head of the Federation of Industrial Associations (FEASIN), told IPS that his organisation “finds the government measures inadequate, as they fail to solve the problem even in the medium term.”

According to Castillo, the uncertainty about energy supplies is touching some raw nerves in the industrial sector.

“With all this happening, there is increasing insecurity about production, and investments are being delayed. Who is going to invest if they don’t know whether there will be electricity or fuel for production, now that we have no gas?” he asked.

Problems over supplies of natural gas from Argentina caused conflict for the government in 2007, and will continue to do so this year. High oil prices are only adding to its difficulties.

“In order to save energy, companies will have to instal different equipment, which demands a lot of investment. The government could provide tax incentives, using part of the profits from copper exports,” Castillo said.

The energy crisis has fuelled the conflict over the planned opening of new hydroelectric stations in the south of the country, and other projects that are criticised by environmentalists.

The government has made its position clear: “We cannot go on simultaneously opposing nuclear, hydroelectric and thermal power stations, wind and solar energy, because we must have energy from somewhere, and we are going to have to do something about it,” said Interior Minister Edmundo Pérez Yoma.

For the time being, the government has chosen to lead by example. Electricity consumption has been reduced in Palacio de la Moneda, the government house, as well as in other public buildings.