AES and Strabag agree new contract for US$3 billion hydropower project in Chile

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AES Gener has announced that it has completed a restructuring of the Alto Maipo hydropower project in Chile. The project involves the development of two run-of-the-river hydroelectric power plants on the upper Maipo River, approximately 50km south-east of Santiago: Las Lajas and Alfalfal II, which have generation capacities of 267 MW and 264 MW, respectively. 

In addition to the power plants, the project entails five high mountain intakes, 73km of tunnels at an average depth of 800 meters and 17km of high-voltage transmission lines. The construction budget amounts to US$3.048 billion.

AES Gener, the project owner, has agreed a new contract with construction contractor Strabag SpA, the Chilean subsidiary of Austria's Strabag SE. The company was initially awarded a US$490 million contract for tunneling and civil works at the project in November 2012.

Due to difficult technical conditions and the withdrawal of another contractor, Strabag is now contracted to construct an additional section of the project - the Yeso/Volcán System. This has added EUR800 (US$950.9) million to the value of Strabag's contract, leading to a total contract value of around EUR1.5 billion (US$1.78 billion).

The new total contract price is a lump sum that covers both the work that has already been completed as well as all future work to be provided by Strabag on the basis of the construction agreement.

Strabag will contribute US$392 million to the construction costs, which AES will repay in 20 years subject to the project achieving commercial operation. The remaining costs will be financed mostly through debt. The contract also transfers all geological and construction risks to Strabag.

AES is committed to contributing US$200 million to the construction of the project and up to US$200 million more if it is required.

Construction of Alto Maipo is currently 64% complete. The two power plants should start operations in late 2020. More than 4,700 workers are employed on the site.