Amid investment push, Chile working to tackle project permitting bottlenecks

Chile is working on a six-pronged plan that includes measures to improve the effectiveness of permitting procedures – a project development hurdle identified by both foreign investors and government officials during an international forum in capital Santiago.

The plan comprises 28 action points, spread across the areas of tax incentives, financing, state investment, foreign investment, public-private partnerships, and permitting and regulations.

Complex and lengthy permitting procedures are cited by investors as potential headwinds to project development. One action point involves establishing a fund for boosting project-processing services. 

During the forum, hosted by investment-promotion agency InvestChile, President Gabriel Boric said foreign investment played a “tremendously important role” in the country’s economic reactivation and that Chile was a secure investment destination, stating, “you can invest with peace of mind.”

Along with the need to make permitting processes more agile, Boric outlined associated challenges, including improving education and skills training.

Boric (pictured) said: “We have a major challenge in terms of easing the flow of investment, in particular with regard to permitting. 

“I’ve spoken with various foreign investors; we know that permitting in Chile is quite lengthy and, sometimes, adds uncertainty, which is not good for us.”

Boric said the objective was tackling the problem without changing the height of the environmental bar.

“It’s not about lowering standards, it’s about fulfilling our role, having a one-stop shop that doesn’t take so long.” 

Investment streamlining is part on an associated eight-point productivity agenda. A productivity working group has been analyzing improvement options and is due to present proposals next month, which may span administrative, regulatory and legislative measures.   

Foreign direct investment is a major growth driver for Chile and seen as key to helping reignite the economy following a post-pandemic deceleration. Officials estimate the six-part plan – based on recommendations from Chilean and foreign institutions and local trade associations – will drive a five-percentage point increase in investment next year. 

The current environmental evaluation system, originally designed to handle just a handful of large projects, needs adapting to better process an increased flow of projects, among them many planned solar and wind farms. 

ENERGY MINISTER

Energy minister Diego Pardow told the conference that a first stage involved diagnosing bottlenecks and examining staffing levels and workflows. Power generators recently told BNamericas that an associated initiative had been designed.

Pardow also told the event – attended by representatives of companies from 28 countries and with a combined project portfolio of US$4bn – that Chile was planning two pioneering tenders next year: one for storage infrastructure and the other a transmission line for which strategic environmental evaluation work has already been carried out in preparation. An energy storage bill recently became law. 

Storage and lines are needed to help combat curtailment problems at renewable energy generation hubs and support the addition of new plants. Chile is weaning itself off coal-fired generation and expanding its park of non-conventional renewable energy plants to substitute this capacity and address future demand growth. 

As of end-October, the country’s environmental evaluation service was processing 112 energy projects – 95 generation and 17 transmission – for combined investment of US$13.2bn, according to an energy ministry presentation. The chief generation technologies are solar PV and wind. 

FOREIGN FIRMS

Officials from several foreign companies present in Chile also underscored the importance of improving the permitting system as well as boosting skills training and maintaining public-private dialogue. 

On improving the permitting process, Marisol Garrido, Chile COO of France-based industrial waste management and land remediation company Séché Group, said permitting was an “important gap.” 

Carmina Hernández, local policy manager at US cloud computing platform AWS, said the firm took a long-term view of Chile, adding that the country was a “strategic” investment destination and that sustainability was a mutual priority.  

Marco Miranda, CEO of Australian mine tailings management solutions firm Phibion, urged continued public-private dialogue to keep the mining industry advancing.

OPPORTUNITIES

Delegates were told the green and digital economies were among chief opportunity areas in Chile, where, for example, at least 36 green hydrogen and derivatives projects are in the pipeline. 

The Boric administration has maintained the pillars and goals of a green hydrogen strategy introduced by the previous government, while trying to spur local content to help support skills and industrial development. A public consultation on a proposed green hydrogen roadmap was due to be launched, Pardow has said previously.

Chile could develop a local green hydrogen industry supplying domestic offtakers while, in parallel, building export-focused plants, a British hydrogen expert told BNamericas recently. 

The country’s first e-fuels demonstration plant is under construction in windswept Magallanes region, where multiple gigawatt-scale production complexes are planned.

FOREIGN DIRECT INVESTMENT

Foreign direct investment reflects sustained investor confidence, economy minister Nicolás Grau said. FDI in January-September rose 10% year-on-year to US$17.1bn, with profit reinvestment accounting for US$7.21bn, equity purchases US$6.03bn and debt instruments US$3.83bn, according to central bank data.