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In a release, the company said it will await the outcome of the country's hydro debate before deciding on next steps regarding the project, in which it owns a 51% stake.
Endesa and Colbún, which owns the remaining 49%, have 30 days to appeal Tuesday's decision, in which President Michelle Bachelet's ministers of agriculture, energy, mining, economy and health rejected the project, citing "grave deficiencies."
In 2011, the project received environmental approval from then-president Sebastián Piñera's administration. But complaints from local residents and environmental groups halted development.
"It's clear that there has been a change in the Chilean government's attitude toward HidroAysén, and that the project in its current format has not garnered sufficient support from the authorities," Endesa said in a statement.
Endesa said it believes that hydro resources, along with gas and renewables, will be crucial to Chile's energy development.
The HidroAysén project called for construction of five dams on the Pascua and Baker rivers in Patagonia, supplying 2.75GW to Chile's central SIC grid.