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Chile Preparing to Present Bill to Overhaul Sectoral Permitting

Chile preparing to present bill to overhaul sectoral permitting, Chile’s government is preparing to present a bill this year to overhaul and streamline sectoral permitting, draft legislation granted priority status, economy minister Nicolás Grau said.

In general, project permitting is often branded a complex and sluggish process in Chile, sometimes taking years.

Slashing timeframes and reducing friction is deemed vital not only to ease the flow of foreign investment but also, indirectly, to help support national and global decarbonization efforts by attracting outlay in the areas of energy metals and sustainable fuels.

Among other work being carried out, the economy ministry has a specialized unit that monitors and works with large investment projects, a process that has enabled officials to identity permitting problems.

Along with an environmental license issued via environmental review agency SEA, project developers require multiple sectoral permits, such as in the area of construction, from a pool of around 400 involving various state entities.

Modernizing and improving sectoral permitting can be done without denting quality, said Grau, who outlined some of the key issues in the sphere.

“For months now, as a government, we’ve been preparing this structural reform of sectoral permits,” said Grau (pictured), who said the scope for making changes under existing legislation was limited.

“Today, there does not exist such a thing as a sectoral permitting system; however, there is a group of over 400 permits …. No one has ever come up with a design that allows you to strike a good balance between the quantity of permits needed, the time involved and the associated risk, so there is a problem of proportionality.”

Others cited are a lack of stipulated time limits for the processing of various permits, the absence of a centralized information repository and the lack of an associated State agency.

A key pillar of the bill involves creating three tracks based on the type of project and introducing processing timeframes for each permit. Under this model, some projects, for example, would need only to provide the likes of a declaration that certain conditions have been met or action taken, instead of having to obtain a permit.

“We’re going to win time here for two reasons: one, because many permits that previously needed requesting are now subject to declarations. Second, we’ll also free up staff time, and this can be reassigned to permit processing.”

Transparency and project tracking measures are also included.

Clare Bowman, COO of e-fuels company HIF Global, said the bill was welcome.

HIF, which was founded in Chile and now operates globally, and partner Enel Chile has plans to build export-scale facilities in Magallanes region.

Bowman outlined the opportunities that investment brings to Magallanes region, the country and the planet.

“For us, the key to all this is the permits,” Bowman added. “As a company, we started here in Chile and now have offices in other parts of the world, and we’re experiencing first-hand what it means to have permit delays here in Chile compared with what we’re doing elsewhere,” she said.

“Any initiative that can accelerate this, for us, is highly welcomed.”

An associated project, Faro del Sur, is due to enter the environmental evaluation system this year, BNamericas was told last week. An original application was pulled last year following a dispute over permitting, which has delayed the project.

HIF has also built an e-fuels demonstration plant in Magallanes region, Haru Oni, and has also announced plans for a e-fuels complex in Uruguay.

Bowman said HIF needs to spend millions of dollars on pre-construction engineering work and that, if projects experience delays, this work becomes obsolete and needs updating.

Former finance minister Ignacio Briones welcomed the bill, citing the urgency for, and economic impact of, stronger investment, but questioned why it does not encompass the environmental area, too, not only to streamline but also to strengthen processes.

“Why not a wider view? Environmental permitting is part of the same problem,” he said.

Bowman also referred to this, urging authorities to also address the environmental permitting system. “This is the other key aspect of projects,” she said during a seminar hosted by local business association iCare.

Grau said there was “of course lots to advance too in environmental matters in different aspects.” He said political challenges were greater than in the sphere of sectoral permits. “I think it makes sense that this is divided and also that the environment ministry leads this. The ministry is advancing in this direction.”

Lawyer Paulina Riquelme, partner at energy and environmental legal firm Eelaw, said clients would welcome any initiative that reduces timeframes. She also urged officials to conduct a thorough review of the existing mass of associated legislation.

Claudio Seebach, executive president of local power chamber Generadoras de Chile, echoed that supporting the flow of energy investment was good for the well-being of the country and planet, not just the economy.

In a May report, the energy ministry said 120 power generation projects for a total of US$15.4bn were under evaluation, along with 24 transmission projects involving 711km of lines and US$774mn in investment.

Source : Bnamericas