Sunday, January 15, 2012

The Chairman of the Board, Jorge Rosenblut's thoughts on the sector's development plan announced by the Government:

"The President had the strength to say that there is a political cost here but Chile needs it"

Endesa's Chairman compares Sebastián Piñera with Eduardo Frei Ruiz-Tagle, who, endorsed Ralco in 1996 from La Moneda, in spite of the fact that its benefits would only be seen years later.

The Chairman, Jorge Rosenblut, was satisfied with President Sebastián Piñera's announcements on energy matters made at a dinner held last Thursday for companies from the sector. Announcements, he quickly clarifies, concerning which "would be of great shortsightedness" to see tacit endorsement of the company's largest project, HidroAysén.

"Since this government has its energy requirements covered for the next two years left in this administration, it could have simply lowered the heat on certain subjects which are indispensable for the country's growth in energy matters, but he decided not to do so and to speak up. Any political analyst would have said "hey, let's go slowly with this, because we are covered and the problem is in the future", emphasizes Rosenblut in this interview.

• And these "certain subjects" involve the specific mention of the use of energy from Patagonia...

"I find that remarkable: serious, serene, and visionary. Chile was endowed with an "oil" or source of energy, which is water, and the President tells us we are going to use this "oil" while fully meeting environmental standards, with a diverse energy matrix, with accelerated development of non-conventional renewable sources, but we are also going to use those resources with which we were endowed. This is something that he could have slowed down and put on hold... these are issues for the future. HidroAysén won't be fully operating until 2025, so what does this contribute to him politically, except costs? From the seat of government, he has a vision which involves national interests, and he takes the time to envision a future developed country, because, as also stated by the former Brazilian President, Lula Da Silva, "There is no growth without energy".

• ¿Does this mark a change in regard to earlier governments?

"As entrepreneurs, it is not our place to criticize, but rather to invest, and take actions. It is good for us, in the world we live in today, with neighbors who are quickly and successfully becoming our most important competitors, to have a national navigation chart, a State policy on these matters. For this reason I don't wish to "hidroaysenize" our conversation, because what I found to be serene and visionary is this holistic vision, is the fact that if I want Chile to become a developed country, I have to be on equal footing with an economic, clean, robust, own energy matrix, and that is what arose from the President's presentation".

• Piñera assumed a political cost, but some people from the Coalition reneged on the support given to HidroAysén...

"I am not going to be a political analyst. But I can make a comparison that fills me with a sense of affection: in 1996, President Eduardo Frei Ruiz-Tagle decided to pay the cost by approving Ralco, which was completed in 2004. If these 690 MW had not been available in 2011, it would have meant a situation of extreme weakness, and possibly electricity rationing, as well as an investment of US$750 million per year in fuels to be burned. Here was a man who paid the political costs in 1996 for something that would quietly enter into operation in 2004. Today we are seeing the same phenomenon. President Piñera is saying "I am going to pay the political costs in order to have energy in 2025". These are two people who faced the tasks on hand ".

• You mean the President dared (to do this)...

"I didn't say that he dared to do it. He had the strength to say there is a political cost here but Chile needs (the energy). It involves realizing what it means to do the tasks required by the State ".

• Why do you think there is so much opposition to HidroAysén?

"All the myths, all the discussions about the HidroAysén project have been demystified with the clarity of primary engineering. The President already said it. The entire area to be flooded by the HidroAysén project corresponds to 75% of Lago Rapel. And with Lago Rapel in the 4th region, have we flooded central Chile? Come on, let's get serious! Each one of the five reservoirs of HidroAysén is equivalent to 15% of Lago Rapel".

• The project managers cannot be isolated from public opposition….

"This is why the discussion broadens, and is not only about Patagonia, but rather about the strengthening of the energy matrix, the non-conventional renewable sources, the transmission infrastructure that carries megawatts between Puerto Mont and Santiago... this expands the issue, and the hydraulic projects in Patagonia are just a part of it. And we will see how the government leads this discussion; it is not up to us to do ".

• What will happen to the country if HidroAysén is not built?

"The President announced that Chile is not going to renounce the use of the strength that it will provide in energy independence, energy stability, competitive energy capacity, and of the hydraulic resources we have been endowed with ".

• Does HidroAysén continue to be a priority for Endesa?

"Our management has a vocation for hydraulics, but fortunately the controlling groups Enel and Endesa have the knowhow and strengths in all facets of the energy business, including nuclear. Mention any type of energy existing on the planet today, and our group is there. We are currently a company with the best brains, the best operative experience, present in 40 countries around the world with about 96,000 megawatts in operation... so however the country wants to go ahead concerning its energy matrix, we will be there ".

• How has the crisis hit the managing companies, Endesa and Enel, in terms of financing?

"They are large companies. As Endesa Chile, I can say: if we have to navigate on these planetary turbulent waters, thanks to God we are on a good ship".

• Finally, all of the opposition to HidroAysén has made the thermoelectric plants proliferate, isn't that a paradox?

"I will give hard data: in 1990 we had 80% of the hydroelectric matrix. In 2000 we had 60% and today we have about 34%. That is, our energy matrix produces more pollution. I'm not saying that this is bad, because we have had energy. The worst thing is not to have energy. And what he (the President) wants to do by taking the energy matrix back to 50%- and which I find noteworthy, has to do with Chile's concern for having a cleaner energy matrix-, will require a great deal of both NCRE and hydraulic generation".

• What are your projections for the year?

"I value the fact that the Government continues applying preventative measures. The country doesn't have a problem of capacity, but rather some problems concerning bottlenecks in transmission. And the authorities are looking at that in extreme detail. We are working under a scenario with the usual tension of a dry year, and where the energy is going to be to provide in 2012. The drier it is, the marginal sources are going to be higher, but remember that the price at which the distributors acquire the energy is the price in long term contracts, which have an average price today of US$99.5 per megawatt hour".

His friends in the PPD: Daniel Fernández and Guido Girardi

Although he hasn't been active in the coalition for 13 years, Rosenblut is a good friend of several well known people in the PPD, such as the executive vice-president of HidroAysén, and the President of the Senate.

• You are a friend of Daniel Fernández. How do you assess his management of HidroAysén?

"I cannot have a vision separate from my friendship. We have been companions on our paths since the year 1990, when we had one of the first meetings with Horst Paulmann in La Moneda to discuss the vehicle impact of the CCU project, currently the Costanera Center. And since then a friendship was forged…. I cannot give a neutral opinion about Daniel Fernández. I think he is one of the 10 best managers in this country".

• Fernández is still friends with Guido Girardi, one of the biggest detractors from the HidroAysén project ...

"I have been friends with the president of the Senate for many years; he was already cutting off my head in the Plaza de la Constitución at the time of Ralco! Our capacity to disagree has been able to coexist with our capacity to be friends. Although he disagrees with HidroAysén, which in my opinion he now disagrees with less or doesn't disagree with anymore, he has always been claiming that the country lacks a serious, robust, executable, believable NCRE policy and when we hear this in 10 more days, we may be surprised when Senator Girardi says: "OK, I finally see that Chile is going in that direction".

• Are you still linked to the PPD coalition?

"In politics, the vocations do not change over time and the important thing is, as a businessman, my vision of things doesn't have to do with politics. They are stages we go through in life, and what I do now is fulfilling. I see myself showing my children, and probably my grandchildren, in 2025, that I was one of the people who helped make Chile part of the first- world".