Probe International
June 18, 2009

In a letter submitted yesterday to the Canada Pension Plan Investment Board, environmental group Probe International urged CEO David Denison to abandon a controversial hydro-transmission scheme in southern Chile’s Patagonia region.

“We believe the proposed US$2 billion investment would be uneconomic and environmentally damaging, and Canadians will see it as a poor investment on which to stake their pensions,” writes Patricia Adams, Executive Director of Probe International, which investigates the effects of Canadian aid and investment in developing countries.

As part owner of Chile’s transmission company, known as Transelec, CPPIB is backing a 1,500-mile transmission corridor — the world’s longest — that is needed to take power from five proposed hydro dams in Patagonia to consumers in the rapidly industrializing north.

Chileans have expressed their opposition to the dams and Transelec’s transmission corridor in three separate surveys with national coverage. The latest one conducted in April 2009 found that 57.6 percent of Chileans do not agree with the mega project.

If completed, the five Patagonia dams would dam two rivers fed by massive ice fields, flood 5,000 hectares of rare forest, some of Patagonia’s best ranchland, and the habitat of endangered wildlife, such as the Pudu Andean deer.

The Canadian-owned transmission corridor would include 5,000 high voltage towers and lines running through 14 legally protected natural areas, around volcanoes, over fjords, and through seismically active areas.

Probe International and a coalition of 58 organizations from Chile, the U.S., Spain, and Italy who are opposed to the scheme say the environmental review process allows the dams to be approved first and the transmission corridor approved afterwards as a fait accompli because it would be considered essential to the dams. This arbitrary and illogical sequencing of approvals, says Ms. Adams, “seems rigged to circumvent a proper and thorough cost-benefit assessment of the project as a whole.”

The coalition, known as the Patagonia Defense Council, also says HidroAysén, the dam builder, and CPPIB’s Transelec will use their monopoly control over Chile’s electricity sector to keep out a long list of competitive sources of power in order to protect this expensive, unreliable, and environmentally damaging Patagonia dam scheme.

Probe International also points out that under Chile’s regulatory regime, Transelec can pass on the high costs and environmental risks associated with the transmission corridor to Chilean consumers. This socialization of Transelec’s costs and risks, and privatization of the profits is offensive to Chileans and Canadians alike, says Patricia Adams.

Transelec has yet to inform Chileans of the exact route the transmission corridor would take. But news has leaked out that Transelec has quietly, and with the assistance of agents, been assembling exploratory mining concessions to secure rights to the land along the transmission company’s preferred route. This bad faith treatment of Chilean citizens by Transelec, the company in which 17 million Canadians have become involuntary investors through CPPIB, has also outraged Chileans, says Probe International.

For more information on this issue, consult the following,

• Read the Consejo de Defensa de la Patagonia Chilena (Patagonia Defence Council – CDP) May 15 memorandum to CPPIB President and CEO David Denison
• Read Probe International’s February 28 letter to CPPIB President and CEO David Denison
  • Read CPPIB’s March 30 response

• Read Chilean press coverage of Transelec’s acquisition of mining concessions along their preferred transmission corridor route (Spanish language)