(Adds details on plan, background)
SANTIAGO, May 8 (Reuters) - AES Gener in Chile on Tuesday announced a more than $3 billion plan to restructure its Alto Maipo hydroelectric project as it seeks to revive the venture following a series of setbacks last year.
Alto Maipo - which includes two power plants and a vast array of tunnels running deep under the Andes Mountains outside of Santiago - slid into technical default last July after it dismissed one of its contractors, leading to cost overruns.
AES said Austria’s Straba would finance part of the project, receiving $392 million over 20 years once it is finished.
“The agreed financial restructuring will fully cover the estimated costs of the project and continue with its development and construction,” AES said in a securities filing.
Shares of AES rose 2.4 percent on Chile’s stock exchange.
Alto Maipo is 64 percent complete, according to AES. The two power plants should start operations near the end of 2020.
Alto Maipo has been the subject of regular protests by residents of the Maipo river valley, who say the project would cut off lake water that flows to the Maipo river, affecting the water supply, farming and tourism.
The problems facing Alto Maipo illustrate the difficulties with mega projects in Chile. Others planned in recent years - such as larger hydropower project HidroAysen- were ultimately halted amid strong local opposition and ballooning costs. (Reporting by Dave Sherwood; Writing by Caroline Stauffer; Editing by Bernadette Baum)