Chile promotes diesel for power amid energy crunch

SANTIAGO, March 10 (Reuters) - Chile's government has sent a bill to Congress that promotes diesel-fueled power generation by speeding a system of tax breaks on the fuel as it seeks to ward off energy shortages, the energy minister said on Monday.

Chile's energy grids have been hit hard in recent months by reduced generating capacity due to shortages in natural gas supplies from Argentina and a drought that has depleted reservoirs at hydroelectric dams.

The project submitted to lawmakers on Monday reforms an existing tax-break system for diesel electricity generation by making rebates repayable more quickly.

"In the current context of energy scarcity, it doesn't make any sense that turbine and other such projects to increase supply don't get off the ground because the current tax rebate system isn't adequate," Energy Minister Marcelo Tokman told reporters.

The government made the proposal following complaints from electricity generation firms, who said it was taking too long to get the tax refund. (Reporting by Monica Vargas; Writing by Gaspard Sebag; Editing by Christian Wiessner)