WASHINGTON, D.C., Apr. 30—On April 25, 1997, the International Finance Corporation (IFC) and Empresa Electrica Pangue S.A. signed an agreement which details the steps to be taken to address outstanding environmental and social issues arising from IFC's investment in the Pangue project. The agreement was reached following lengthy and candid negotiations between IFC and the Company held in both Santiago and Washingon, D.C.
Pangue S.A. constructed and now operates the 450 MW hydroelectric facility located on the Bio Bio River in Chile. In December, 1992, IFC's Board approved a loan and equity investment in the Pangue Project. In March, 1997, Pangue S.A. prepaid in full the loans provided by IFC and participant banks. IFC retains a 2.5% equity interest in Pangue S.A.
Pangue S.A. has agreed to examine and provide further information and analysis on downstream conditions on the Bio Bio River. Pangue has also reaffirmed its commitment to take any further actions consequent to this undertaking, if needed, to ensure that it is able to comply with the environmental requirements previously agreed with IFC in connection with the Pangue project.
IFC and Pangue have also undertaken a review of the current operations of the Pehuen Foundation, and have considered additional steps which could be taken to enhance the existing programs. Specifically, Pangue has agreed to take a number of steps which are intended to further enhance the active participation of the Pehuenche people and their elected representatives in the Foundation's activities, to increase the Foundation's focus on long term, sustainable development projects which build capacity, and to promote the electrification of all the communities which are part of the Foundation. Pangue has also pledged to increase its current level of financial support for the Foundation.
Pangue has reaffirmed its existing commitment to develop and present to the local governments of Santa Barbara and Quilaco a Master Plan for development in the vicinity of the Pangue reservoir area. Pangue has also reaffirmed its existing commitment to develop and present to the National Forestry Commission a Watershed Protection and Management Plan.
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