Chile's Bachelet seeks to ease fears of energy crunch, boost investment

SANTIAGO, June 25 (Reuters) - President Michelle Bachelet is seeking to assuage fears that Chile will be squeezed by an energy crunch, telling industry leaders late on Tuesday that her government will take measures to boost public and private investment in power generation.

World No. 1 copper producer Chile has faced resistance in its efforts to increase energy output as environmental activists and local communities have been able to block what they call excessively large and disruptive power projects.

"We're aware of the urgent need to boost projects to confront our (energy) infrastructure deficit, so this government will decidedly support all initiatives that comply with current regulations and adequately insert themselves into their respective communities," Bachelet told influential energy- sector figures at an annual gala. "Have no doubt about that."

Earlier this month, a special ministerial committee canceled the permit for the country's largest power project, the 2,750 megawatt HidroAysen hydroelectric dam. The cancellation followed years of legal wrangling, with environmentalists arguing that it would wreck pristine valleys in Chile's wild south.

A series of other energy and mining projects in the Andean country have been blocked due to concerns about damage to water, health, indigenous communities and glaciers.

Bachelet, a center-left politician who took office for a second non-consecutive term in March, reiterated her government's commitment to connecting the northern SING power grid to the central-south SIC grid.

Together the two grids comprise the vast majority of the roughly 18,500 megawatts in Chile's network and supply electricity to industry and most of the country's 17 million residents.

Bachelet also emphasized plans for state oil company Empresa Nacional del Petroleo to participate in the construction of a new liquefied natural gas terminal.

About 1,200 megawatts in alternative renewable energy, 865 megawatts in large-scale hydropower and 622 megawatts in thermal-based electricity are slated to be added to Chile's generation capacity during Bachelet's four-year term.

"Obviously these aren't the only projects we'll support because in order to have more energy in our system we need more projects and more investment," Bachelet said.

"We also need more competition and more actors to invest in the sector." (Reporting by Anthony Esposito; Editing by Peter Galloway)