Chile upholds approval of Cuervo hydroelectric project amid protest

SANTIAGO, Jan 18 (Reuters) - A Chilean ministerial committee upheld on Monday the environmental permit for Energia Austral's Cuervo hydroelectric dams, dismissing nearly a dozen complaints filed against the controversial project by environmental and citizens' groups.

Energia Austral, a joint venture between mining and trading company Glencore Plc (Xetra: A1JAGV - news) and Australian power producer Origin Energy, received the initial go-ahead or the $733 million project from local environmental authorities in September 2013.

The 11 complaints against Cuervo's two dams, which are slated to be built in Chile's pristine Aysen region some 1,350 kilometers (839 miles) south of capital city Santiago and have an installed capacity of 640 megawatts, claim the project would hurt local flora and fauna and be a drag on the area's tourism industry.

Local community and environmental organizations opposed to the project also claim that the project's proximity to a geological fault line poses a risk to nearby towns.

"The evaluation of this hydroelectric plant has been up to now tailor-made to suit the company, completely ignoring the welfare and opinion of the citizens of Aysen," said Diego Lillo, lawyer for the FIMA (Other OTC: FIMA - news) citizens' organization.

"Residents are forced to face excessive risks because of the project," said Lillo, adding that "there is a deficient evaluation of the seismic and geological variables."

As part of their ruling, the ministers will require Energia Austral to provide additional information about the operation of the dams.

This information will in turn be evaluated by the National Geological and Mining service before the company receives the go-ahead to fill the dams with water.

"This is a joke," said Peter Hartmann, the head of Citizen Coalition for Aysen Life Reserve.

"To make a decision about a 13,000 hectare dam in an area of extreme risk like the Liquine-Ofqui fault line, (an area) surrounded by volcanoes, and without first having defined a regional energy policy, is irresponsible."

In recent years, community organizations and environmental groups successfully helped block the development of the nearly $9 billion HidroAysen dam complex, a joint venture between Endesa Chile and Colbun SA. (Reporting by Gram Slattery; Editing by Anthony Esposito and Matthew Lewis)