TotalFinaElf said today that an agreement has been signed with the Chilean company Gener to form a strategic alliance covering the development of electricity generation throughout Latin America.

As part of the strategic alliance, TotalFinaElf group will acquire an 80% interest in a new company that will hold Gener’s interests in its Argentine power businesses, notably in 3 power plants which have a combined capacity of 4,209 megawatts. Gener will own the remaining 20% of the company’s shares.

In addition, by acquiring new shares to be issued as part of a capital increase, the TotalFinaElf group is expected to become a shareholder of Gener with around a 20% interest.

The third element of the strategic alliance will involve the pursuit by TotalFinaElf and Gener of opportunities in power generation throughout Latin America, with an initial focus on Southern Cone countries and Colombia. Under the alliance, projects in Argentina will be led primarily by the new company, while projects in Chile will be managed by Gener. In other countries, TotalFinaElf and Gener will operate jointly on a 50/50 basis.

The transaction is expected to represent for TotalFinaElf a cost of some USD 810 million.

The agreement is subject to approval by Gener’s shareholders, finalization of the definitive agreements, as well as approval by relevant regulatory authorities and competition authorities, among others.

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Gener is Latin America’s third largest independent power producer, with capacity close to 7,550 megawatts in Argentina, Chile, Colombia and the Dominican Republic, and is among the region’s leading gas-fired generators.

By strengthening its position across the gas and electricity chain, this transaction is designed to enable TotalFinaElf to pursue its previously announced strategy of actively participating in the growth opportunities in Southern Cone gas markets, where the Group is already a major player.