Santiago Times for May 4, 1999 Via NY Transfer News Collective * All the News that Doesn't Fit Santiago Times May 4, 1999 * HEADLINE: POWER CUTS SUSPENDED AFTER HEAVY RAINFALLS But Government Sanctioned Protests Are Set To Go Ahead KEYWORDS: ENVIRONMENT; POLITICS; SOCIAL ISSUES SOURCE: LA TERCERA SOURCE: LA NACION TEXT: The obligatory electricity cuts which have been in force since March in the Central Interconnected System (SIC) power grid were called off Monday after rainfall in southern Region VIII raised water levels in lake Laja, one of the principal sources of hydroelectric energy for the SIC. But the good news for over 85 percent of the population affected by the power cuts was checked by Public Works Ministry Undersecretary Juan Carlos Latorre, who said "however good the rains have proved, it does not resolve the electricity system crisis." Latorre said what was needed was large-scale investment in the energy system, principally in the construction of thermoelectric generators which will function irrespective of weather conditions, and energy saving programs. Latorre also noted that the precipitation will alleviate the irrigation crisis for farmers in Region VIII, who had been threatened with reduced water supplies from lake Laja due to planned diversion of water to supply national power firm Endesa's nearby Antuco, El Toro and El Albanico generators. Power cuts in the SIC have been partly due to the worst drought in 50 years in Chile, although energy companies have been criticized for concentrating on hydroelectric generators, which make use of a low-cost water, rather that building more expensive thermoelectric power centers. President Eduardo Frei recently announced a contingency plan to combat the current energy crisis by increasing fines and giving greater oversight and regulatory authority to the Electricity and Fuel Superintendency (SEC). This plan, however, was panned by right-wing senator Ignacio Perez, who Monday said his National Renovation party and the Independent Democratic Union will oppose the legislation because it borders on granting "unconstitutional" powers to the SEC and would discourage potential investors. In related news, the government approved a public demonstration to be held May 12 in Santiago to protest the power rationing, which looks set to see some 10,000 people light candles in a symbolic gesture of discontent aimed at power companies and the government. Dep. Guido Girardi, one of the event organizers, said, "this is an apolitical act on the part of the citizens, we hope it will be a family event which will make it clear we are not going to let ourselves be trampled all over." Event organizers also called on energy users to refuse to pay their bills in protest at the outages. * HEADLINE: CURRENT EVENTS BRIEFS KEYWORDS: POLITICS; ECONOMY; INTERNATIONAL; ENVIRONMENT SOURCE: EL MERCURIO SOURCE: LA TERCERA TEXT: Today's other headline stories in brief: -- ZALDIVAR AND LAGOS DEBATE TONIGHT. The two candidates vying to lead the governing Concertacion political alliance in the 1999 presidential election - Sen. Andres Zaldivar and Ricardo Lagos - will face off tonight at 10 p.m. in the first of two nationally televised debates. The second televised debate will occur May 27, just three days before the May 30 primary vote which will the decide the winner. Zaldivar, representing the Christian Democratic Party (PDC) and Lagos, of the Socialist Party (PS) the Party for Democracy (PPD) and the Radical Party (PRSD) will be asked a series of questions by four prominent television journalists and then be allowed three minutes for closing remarks. Polls continue giving Lagos a wide advantage, although analysts say Zaldivar's strength cannot be underestimated given the well- known efficiency of the PDC political machine, famed for its ability to turn out the vote. Another imponderable, say the analysts, will be the extent of "cross-over voting," that is, individuals politically identified with the right opposition parties but who opt to vote for Zaldivar in the Concertacion primary to prevent a Lagos triumph. The Zaldivar camp has been upset in recent weeks because of President Eduardo Frei's decision to stay above the primary fray. Frei belongs to the PDC. The Zaldivar camp must also be disconcerted with inroads Lagos appears to be making with Chile's business community. Monday night the center-left Lagos met with 300 business leaders committed to his candidacy, including Andres Bianchi, president of Dresner Bank; Maximo Pacheco, Carter-Holt VP for Latin America; Daniel Albarran, president of the salmon exporters; Juan Eduardo Herrera, trade VP at Codelco; and many others. -- MAPUCHES LEAD SEVEN MORE LAND TAKEOVERS. Twenty- four Mapuche indigenous groups Monday peacefully occupied seven more properties owned by forestry companies Mininco and Bosques Arauco in southern Chile. The groups claim the land as historically theirs and say that since their request to meet with President Eduardo Frei has been turned down, they have little option but to continue with the tomas to keep their demands in the public's consciousness. The new lands occupied are in the communities of Lumaco and Nueva Imperial in the Arauco Region, and in Tirua and Canete in the Bio Bio Region and total more than 1000 hectares. Government authorities in Santiago discounted these latest occupations, saying they were clearly publicity stunts carried out by different Mapuche groups seeking to claim leadership of the Mapuche cause. Calls for dialogues between the Mapuche groups and regional officials have been unproductive. "The call for dialogue made by authorities has been well used by the government and is, at heart, a means to break up our movement," said Mapuche leader Galvarino Raiman. "Dialogue is always possible, because we know clubs and gunshots will not lead to a solution. Only conversation will, but serious conversation, responsible and honest." -- HOLES IN INSURANCE LAW EXPOSED BY DEATH SCAM. Official statistics show that between 10 and 15 percent of all insurance claims in Chile are fraudulent, resulting in some US$60 million in payouts in 1998 to bogus causes, a point recently brought to public attention by the case of Enrique Contreras, the man who faked his own death to collect some US$250,000. Insurance companies, however, also claim they are the subject of unduly harsh regulations regarding their ability to prosecute those responsible for fraud. They cite the case of Contreras, who was arrested along with his accomplices after his coffin was found to be empty, saying they had to go through all the legal processes to pay the insurance money to then catch the tricksters in the act, a pre- requisite to be able to prosecute, before the expiration date on the insurance contract ran out. Chilean Insurers Association General Manager Joaquin Echenique said the current regulations "do not help insurance companies combat fraud." He added insurance firms do have proven ways of detecting cases of fraud, such as suspicious increases in the insurance sum before a claim and strong pressuring for payment, but current regulations hinder any swift action to jail the con-men. Echenique welcomed new legislation updating insurance regulations which is set to come before Congress soon. He said "now we won't have to pay out a claim in order to prosecute, like it is in every other country in the world." * HEADLINE: SPEED TRAPS AND TICKETS FINANCE CITY SERVICES Municipalities Earned US$47 Million in 1998 From Traffic Fines KEYWORDS: URBAN ISSUES SOURCE: LA NACION TEXT: (Ed. note: The highly polemical issue of traffic on Chile's congested roads is never far from the public eye, be it related to unbearable pollution levels in Santiago leading to enforced traffic restrictions or the high incidence of fatal accidents on the nation's roads. But now a new issue has come to public attention: the zealous police and traffic wardens who hand out copious fines, thereby providing significant funds to boost municipalities' annual budgets. The ethics of such a campaign aimed at offending drivers has only recently been brought into question). Statistics reveal that half of Chile's motorists receive traffic fines at least once a year. In Chile there are 250 courts specially dedicated to dealing with traffic offenses, which every year process around 1.5 million cases. Last year municipalities earned an estimated US$47 million from traffic fines alone. Many Chilean motorists are aware of the daily risk of incurring fines for different traffic offenses, but the majority are still unaware of where this money ends up. According to current legislation, the main part of the fines head straight for municipal coffers, while 18 percent goes towards the National Service for Minors (Sename). The law clearly states this sum should be paid to Sename fortnightly, although authorities admit there is no effective way of supervising the process. Municipal authorities insist they follow the law in the matter, and Santiago district La Pintana Mayor Jaime Pavez, whose municipality earns some US$412,000 every year through traffic fines, said as soon as the money comes in, records are made and the correct sum paid out to Sename. Pavinet added the measures help control traffic levels and contribute towards public well-being. Christian Democrat Dep. Sergio Elgueta is one of those who has noted the lack of centralized overseeing body for funds generated by traffic fines and has called for reforms to current legislation to create transparency through increased regulation. Motorists also complain of the "armies" of over-zealous wardens and traffic police who act on behalf of municipal authorities to supplement their annual budgets, especially during times when funding is scarce. This criticism is fiercely refuted by mayors and judges alike. Hernan Ortega, director of operations in the Santiago Center district, said "we are trying to educate people, I only wish we could be even stricter in enforcing the fines." In 1998 the Santiago Center municipality earned some US$6.8 million from traffic fines, around 6 percent of its annual budget. It employs 140 inspectors, supplemented by local police, and some 2,000 tickets are issued every day in the area. According to Carabineros police authorities, who issue over one million fines every year, the most common offenses they deal with are serious infractions like dangerous overtaking and drink driving. Between January and September 1998, 824,000 traffic offenses were dealt with by Carabineros, with speeding the commonest infraction, followed by driving with no seat belt. The resulting legal and administrative processes can be drawn out and convoluted, and motorists most often opt to simply pay the fine rather than go through the whole procedure. * HEADLINE: MINING NEWS ROUND UP KEYWORDS: MINING SOURCE: EL MERCURIO SOURCE: EL DIARIO TEXT: Today's mining news, as it appears in the national media: -- CODELCO TO EXTEND ITS OPERATIONS. A report that Chile's state-owned copper giant Codelco is considering new joint business ventures with various multi-nationals brought a muted response from Codelco officials when consulted by The Santiago Times. Codelco officials would neither confirm nor deny a report in the local publication Ingeniero Andino saying that a deal is in the making between the state-owned giant and Canada's Rio Algom Limited to develop the Aguila copper deposit. Rio Algom owns the Cerro Colorado copper mine in Iquique, and is currently developing the Spence copper project in Antofagasta. Nor would Codelco officials comment on the record about a pending deals with Mantos Blancos (controlled by South Africa's Anglo American Minorco) to develop the San Bartolo and Pasaca copper deposit; with Billiton Chile (a subsidiary of South Africa's Gencor company) to explore the Anillo copper and gold deposit; with Finland's Outokumpu to explore the Sierra Mariposa copper prospect; and with the USA's Cyprus Amax Minerals to explore the Tuina Oeste copper deposit. Codelco officials have stated for the record, however, that the company is looking to create new joint venture businesses with the private sector, as exemplified by its current joint venture deals with Cyprus Amax in developing El Abra, and various others. In related news, the Ingeniero Andino reported Codelco is scouting by airplane the Argentine sector of the Andes and hopes to find joint venture partners to develop sites in the border area. Again, Codelco officials would neither confirm nor deny the report. * HEADLINE: BUSINESS BRIEFS KEYWORDS: ECONOMY; INTERNATIONAL; NAFTA SOURCE: EL MERCURIO SOURCE: EL DIARIO TEXT: Today's top business stories: -- PHONE AND INTERNET USE TO COST LESS. Consumers will see an immediate drop of about 12 percent in the cost of a phone call under the new fare structure announced yesterday by the government. The new five-year plan governs tariffs charged by the Compania de Telecomunicaciones de Chile (CTC), the nation's dominant phone company with 2.8 million clients, and is mandated by the Anti-monopoly Commission. CTC said it would appeal the new rates. The Transport and Economy Ministries will announce fee structures for the smaller companies in Regions X and XI shortly. Rates for competing companies, mobile phone calls and Internet service rates will also fall immediately and continue to drop during the five-year period, such that all calls should cost 16 percent less in 2004. The new tariff structure will also provide a reference point for the rates other companies charge. The rates set for an immediate 12 percent drop are the Set Rate (Cargo Fijo), henceforth renamed Telephone Line Service (Servicio de Linea Telefonica), and the daytime Local Service Rate (Servicio Local Medida, SLM). The new structure also establishes a new Local Rate (Tramo Local) to be applied by the minute to phone calls made between service companies, by mobile phone and in rural areas, which should result in a 10 percent drop in such rates. In signaling its opposition to the new rates, CTC said that in the long run they would restrict sustainable development in the sector as well as brake innovations by other companies, especially long distance companies, to the disadvantage of consumers. -- CHILE PRIES OPEN FRUIT DOOR TO CHINA. Chilean fruit producers may soon be growing table grapes and stonefruit on a demonstration farm in mainland China - part of their effort to pry open the door to the huge Chinese market. The initiative was announced this week by Chilean Agriculture Minister Carlos Mladinic, recently back from a trade mission to the Republic of China where he had extended talks with Chinese Agriculture Minister Chen Yaobang and China's top agricultural inspection official Tian Runzhi. Mladinic said the demo plot will help familiarize China with Chilean fruit and create greater understanding between the two nations. Mladnic says China has agreed to permit entry of Chilean fruit, but subject to a protocol that has yet to be drafted. The deal would allow fruit from northern Regions III - V to enter the Chinese market after cold storage treatment, rather than the 40 day quarantine previously required. The Chinese will reserved the right, however, to require quarantine of fruit from Chile's Metropolitan Region because of recurrent problems with fruit fly infestations. This latest agreement compliments an earlier deal signed between Chile and China in November 1997 permitting entry of fruit from Regions VI-X with only cold storage treatment. A Chinese fruit delegation is expected to visit Chile next November to review growing and packing conditions here. Export of other Chilean fresh fruit products like lemons and garlic are still on the table for discussion. -- PENSION FUNDS CELEBRATE 18TH ANNIVERSARY. Ceremonies this past weekend commemorating the 18th anniversary of the creation of Chile's private pension fund system gave industry leaders reason to consider the advances that have been made, and the challenges that still lay ahead. After years of double digit profits, the Pension Fund Managers (AFPs) are now showing their lowest rate of returns ever. "The primary goal of the system, to generate good pensions, has been accomplished," said AFP founder Jose Pinera. Still, government and fund executives agree that major changes are in the offing, among them broadening the range of returns considered acceptable, expanding investment limits, a new commission structure and improvements in service quality, with the aim of making the pension investment system cheaper and more efficient. The system's rate of return for the year was at 1.81 percent at the end of March, about average for the last four years but down from 1994's 18 percent. -- CMPC CONTINUES FORESTRY INVESTMENTS. In the midst of "significant" efforts to reduce its indebtedness, forestry products company CMPC said it would invest US$155 million of its own money this year to complete current projects. The money will go to tree farms in Chile and Argentina, as well as a tissue plant in Zarate, north of Buenos Aires. The company has invested US$1.6 billion in the last three years. CMPC Vice President Eliodoro Matte said the company was anticipating a US$50 per ton increase in the price of wood pulp to US$450 by the end of the year. "Still a very low price, but at least the downward trend has been reversed," he said. CMPC also plans to increase its wood pulp and cardboard production this year as well as double its paper exports. -- CTC DOUBLES MOBILE PHONE INVESTMENT. In response to the continuing strong interest in cellular phones, the Compania del Telecomunicaciones de Chile (CTC) plans to more than double investments currently planned in its Startel subsidiary, from US$90 million to US$200 million, for a total yearly investment of US$500 million. The money will mostly go towards new equipment. Outgoing General Manager Jacinto Diaz said the plan could be revised again later in the year, noting that the nation's new "calling party pays" fee arrangement has resulted in a substantial growth of prepayment plans. Startel has 765,000 clients and hopes to reach one million by the end of 1999. -- QUINENCO NOT READY TO INVEST WINDFALL. The Luksic family's giant holding company Quinenco is studying new investment opportunities for some US$880 million which it has earned from recent selloffs, according to president Guillermo Luksic, but "it isn't visualizing any acquisition in the financial or banking sector." Yesterday the firm's O'Higgins Central Hispano (OHCH) holding company affiliate received US$600 million from the sale of its share of the Bank of Santiago to Banco Santander Central Hispano (BSCH). Earlier Quinenco received US$280 million for its share of VTR Hipercable from the United Holding Company, although it is committed to taking complete control of VTR S.A. by buying Southwestern Bell's share, valued at US$36 million. -- TARIFF VIEWED AS TROUBLE FOR AGRICULTURE. Despite assurances from the Agriculture and Finance Ministers that proposed reforms are only "technical specifications," National Agricultural Commission President Ricardo Ariztia says changes in the system of price supports and price bands could spell "ruin" for southern agricultural producers. The government is proposing legislation to fulfill Chile's commitment under the World Trade Organization to equalize tariffs with other countries. It would allow a maximum import tax of 31.5 percent, even if the resulting price undercuts local producers. Ariztia said southern beet and wheat growers would be particularly hard hit, and he criticized President Eduardo Frei for abandoning a promise to give southern producers 18 years to modernize and become competitive. -- SANTA ISABEL TO INVEST US$90 MILLION IN 1999. The Chile-based Santa Isabel supermarket chain will invest US$90 million during 1999, company spokesman Eduardo Orteu said. More than two thirds of this amount, or US$65 million, will be invested in Chile to open three new stores, to construct a new distribution center in Santiago, and to restructure other stores. The new stores will be built in Regions V and XII, while the distribution center will begin operations between January and March of the year 2000. Another US$20 million will be destined to begin operations of five stores in Peru, while US$5 million will be spent to open a store and a bakery in Paraguay. Ortue said a name used for several newly constructed stores, "Stock," has been dropped for lack of consumer identification. Instead, the new stores will be renamed to be part of the Santa Isabel chain. -- SANTA CAROLINA TO SELL ASSETS. The Santa Carolina wine and foodstuff producer is contemplating the sale of one of its major assets to offset liabilities which at Dec. 31, 1998 had risen to some US$25.7 million, according to company President Fernando Larrain. Larrain said negotiations for the sale of one of the firm's holdings were "already underway and relatively advanced" although he declined to name which asset was up for sale. He added another way to offset recent losses would be to enter partnerships with foreign firms who could inject capital. Santa Carolina owns food and drink firm Watts, with operations in Chile, Paraguay and Peru, dairy firm Lacteos Conosur in Argentina, and the Loncoleche dairy and agriculture company in Chile which in turn owns Laive in Peru. In the wine sector, Santa Carolina owns Vina Casablanca and Licores Fehrenburg in Chile and the Santa Ana winery in Argentina. The foodstuff portion of Santa Carolina, which represents 71 percent of its sales, is set for a 5-percent increase in sales in 1999 with projected profits of some US$5.1 million. General Manager of the Vina Santa Carolina winery Pedro Jaramillo predicted a 3-percent decrease in wine sales for 1999, however, due to the forecast drop in demand during the first half of the year from Japan, its principal export destination. -- CATERING COMPANIES EXPECT TO DOUBLE SALES. The largest catering companies in Chile, Central de Restaurantes and Sodexho, are expected to double their sales in the next few years, due to an expected increase in the number of clients served, principally businesses and full day schools. Central de Restaurantes spokesman Carlos Frey said the company expects a 12- to 15-percent sales increase in 1999 over its US$106 million sales in 1998. He said Central de Restaurantes currently has 12 service contracts and supplies 155,000 meals per day. Frey added that the company expects to continue growing at the previous year's rate to maintain its status as the largest catering company in the Chilean market. Meanwhile, Sodexho spokesman Patrick Gargula estimated company sales between September 1998 and August 1999 would be nearly US$53 million, a 5-percent increase over the previous corresponding period. * -- BASIC ECONOMIC INDICATORS: Dollar's value: Observed, 483.37; Accord, 485.38 Interbank, 483.30 Today's Unidad de Fomento, UF: $14,807.16 Copper Price: Flat at US$0.7112 Stock Exchange: IGPA, Up 0.01% to 4,458.30, IPSA, Down 0.82% to 118.49 * ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: nyt@blythe.org ================================================================= pvtsa-05.12.99-03:08:55-27594