Chile: the balanced view : a recopilation of articles about the Allende years and after

A.INFRAESTRUCTURE From this point of view, energy and transportation were the vital sectors most affected under the previous regime. The development and maintenance of other sectors of the infrastructure were also postponed. l. ENERGY a) Electricity From mid-1971 the government maintained electricity rates without readjusting prices. By the end of 1973 the consumer price index had risen 16 times. By that time the new government had already made the first readjustment of prices by five times, and by . February-March 1974 prices had been readjusted by ten times. However, even this in– crease was insufficient to reach the levels of return that are desirable and guaranteed by law. It is expected that by the end of 1974 a satisfactory situation wil have been reached. The electric power plants that most urgently need emergency financing in foreign currencies belong to electric power systems whose output is already or will be rationed during 1974. Funds are needed for imports required by the plants and for completion of plants whose construction has been begun with our own resources or with already existing credits. Among the systems whose output has been or will be rationed, the most important are the Tarapaca system, located in the extreme northem part of the country, and the Huasco system, which supplies a number of large, medium-sized, and smatl iron ore mines whose products generate foreign currencies for the national economy. During 1973 the supply of electricity was severely limited in the Huasco system. A third area that will soon enter the critical stage is the city of Antofagasta. Approximately $ 25 million of foreign credit would be required to finance the entire urgent programo Because of the nature of the program (great variety of materials to be purchased in relatively small quantities for relatively small operations), this credit should acquire the character of a global operation without the difficult procedure of separately justifying each project involved. Such a procedure would make it impossible to obtain approval of the credits within a reasonable time. The mediúm-term Electric Power Plan. for 1974-80 includes the plants and systems described in Chart 1. Because of the enormous delay suffered by the electrical power programs and in order to avoid greater damage as a result of rationing withih the intercon– nected system that includes the most densely populated and economically the most important areas of the country, it has been neeessí'lry to consider in the present program an increase in the number of thermal installations planned, inasmuch as they can be put into service much sooner than hydroelectric plants. From Chart 1 it is evident that in order to make up for the delay in electrie power programs under the previous regime, 44 pereent of the capacity to be installed must be thermal. More than halfofthis pereentage would haveto be based on products derived from petroleum, thereby generating a marked yearly expendíture of foreign currency. If it is assumed that the entire investment would be made within eight years, the average investment would be approximately US$ 160 million. This figure would be a very large portion of the fixed national investment, sinee it wou Id represent about 8 pereent ofthe 224