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Endesa Chile's Generation Plant Ralco Under Attack

Tuesday March 19, 7:00 pm Eastern Time

SANTIAGO -(Dow Jones)- A conflict surrounding Chile 's leading electricity generator Endesa's Ralco hydroelectric project in Southern Chile has escalated dramatically in recent weeks, leading the regional government to file charges against the unknown perpetrators under Chile 's anti-terrorism law.

Masked attackers this month have twice burned trucks belonging to Endesa subcontractors, the most recent taking place on Sunday night. Esteban Krause, governor of Chile 's southern Bio Bio province, submitted the charges before a court in the southern city of Concepcion Tuesday morning.

In addition to Sunday's attack, another truck was burned on March 3 . Two days later, a group of protesters blocked an access road to the construction site of Ralco, leading Endesa, or Empresa Nacional de Electricidad SA (EOC), to request government protection.

The issues surrounding the $568 million Ralco project date back years, if not centuries.

The hydroelectric plant involves the construction of a dam that will flood about 3,500 hectares of land, a portion of which belongs to Chile 's indigenous Mapuche-Pehuenche people. More live in the area and will be indirectly affected by the dam's construction.

Protests against the Ralco construction come in the context of a broader fight of the Mapuche-Pehuenche people for historical land rights throughout Southern Chile .

In accordance with Chilean legislation governing indigenous rights, Endesa has so far successfully negotiated land swap agreements with 93% of the people directly affected by the flooding, a company spokeswoman said.

Analysts say there's no immediate concern that the $568 million construction of the Ralco facility will be delayed as a result of the recent attacks.

They point out Endesa has full government support for the Ralco project, a key medium-term source of installed capacity on Chile 's central power grid, which provides electricity to the majority of Chilean homes and industry.

Also, says local brokerage Celfin analyst Francisco Colchero, the construction of the Ralco project is currently fully insured, covering Endesa in case of either damage project or its delay.

The Ralco start date has already been pushed back once, to December 2003 , after heavy flooding damaged a containing wall.

There are clearly risks, however. First, it's impossible to anticipate if the conflict will escalate further. Ralco has become a symbol of the Mapuche- Pehuenche struggle, Colchero points out.

Endesa, for its part, says only that recent actions "do not correspond to the people who live and work in the region, but instead to people coming in from outside."

Endesa is owned 60% by Enersis SA (ENI) which, in turn, is 64% controlled by Spain 's Endesa SA (ELE).

Company Web site http://www.endesa.cl

Christen A. Jamar

Source: DOW JONES NEWSWIRES

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