Chile gov't seals deal to end gas price protest

Chile's government reached a deal to end a weeklong protest in the frigid far south, scaling back natural gas price increases amid threats of labour disruption.

The government agreed to raise natural gas prices by 3 percent in the southern Magallanes region, a far cry from the 16.8 percent increase originally proposed by state oil company ENAP as it seeks to reduce subsidies.

The planned hike outraged residents in the Patagonian region that depends on subsidized natural gas to cope with icy conditions. It triggered protests that trapped hundreds of tourists and caused scuffles between residents and police.

The government of centre-right President Sebastian Piñera previously caved in to popular pressure over environmental concerns about a $1.1 billion thermal power plant planned by French energy giant GDF Suez.

Some investors in the multibillion-dollar mining and energy industries have questioned whether Piñera will bow to popular pressure on other controversial projects.

A cluster of unions from the mining and energy sectors had threatened to join a strike in the Magallanes region. Local media said truckers started to lift roadblocks.

"We have reached a wide-reaching agreement to put an end to the protest in the Magallanes region," said Mining and Energy Minister Laurence Golborne, who took on the energy portfolio on Sunday amid a reshuffle seen aimed at stemming a slide in the government's popularity.

The deal made with protest leaders raises natural gas prices in line with inflation and increases subsidies for the region's poorest.

Piñera's approval rating fell to 47 percent in December, down from a high of 63 percent in October as a boost from the stunning rescue of 33 miners trapped underground for 2 months wore off.