Fitch sees recovery for Chilean energy companies

Fitch Ratings believes that Chilean energy companies will likely be able to absorb losses resulting from the earthquake and tsunami that hit the central-south part of Chile on Feb. 27, although industry profitability ratios may be moderately affected during the next few quarters.

The agency emphasized that its assessment of recent events is based on preliminary analysis and is still evolving.

According to Fitch:

• 83% of AES Gener SA's (BBB-/A(cl)/stable) installed capacity in Chile is operating normally;

• Chilquinta Energia SA (AA(cl)) was moderately impacted by the earthquake, and most of the energy supply has already been restored;

• The electric distributions assets in the epicenter zone of Compania General de Electricidad SA's (A+(cl)) subsidiaries CGE Distribucion SA and Empresas Emel SA were partially affected by the earthquake. At this stage, Fitch expects the catastrophe will moderately impact the company's revenues and require unexpected capex;

• The earthquake did not affect Colbun SA's (BBB/A+(cl)/stable) generation assets but had minor impacts on the transmission and connection to the grid of the Hidroelectrica Chiburgo 20 MW plant, which are expected to be shortly restored;

• The earthquake halted operations in two of ENAP's (A/AAA(cl)/stable) refineries that represent 93% of its refining capacity. Fitch said that from a financial perspective, ENAP will face increased working capital needs as import volumes rise and revenues may be affected by the catastrophe, but the agency anticipates continued strong parent support;

• 97.5% of Empresa Nacional de Electricidad SA's (BBB+/AA(cl)/stable) installed capacity in Chile is up and running;

• Enersis SA's (BBB+/AA(cl)/stable) generation business, which is carried through Endesa Chile, was not materially affected by the earthquake;

• The earthquake affected Gasco SA's (A+(cl)/ table) liquefied natural gas business and natural gas distribution unit near the epicenter area, which represents a minor portion of the company's revenues and funds generation;

• Guacolda SA's (A(cl)/stable) generation and sub-transmission assets were not affected by the earthquake, and operations continue in normal fashion; and

• The earthquake had minor effects on Transelec SA's (BBB-/A(cl)/stable) power transmission lines, which were rapidly restored and are now fully operational.

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