Adds further comment from IMPSA president, background and no reply to questions from electricity ministry, paragraphs 6-13

By Marianna Parraga

HOUSTON, June 9 (Reuters) - Energy company IMPSA has progressed in renegotiating a contract to develop and rehabilitate two key hydroelectric projects in Venezuela, which could add up to 672 megawatts of generation capacity starting in the coming months, the firm's president Jorge Salcedo told Reuters.

A contract signed by IMPSA - originally an Argentine state-owned firm, now owned by the U.S.-based Industrial Acquisitions Fund - and Venezuelan utility Corpoelec more than a decade ago has remained unexecuted amid payment issues and U.S. sanctions.

The pact, supported by bank loans including from the Andean Development Corporation, left equipment manufactured by IMPSA stalled in the company's warehouse in Mendoza, Argentina.

Under a U.S. license granted earlier this year, IMPSA is now moving to sign a contract addendum with Corpoelec to export and install the hydraulic turbines and mechanical equipment, which would allow it to inaugurate two units that are part of the hydroelectric project Tocoma and to rehabilitate three separate units of project Macagua, both in Venezuela's southern region.

"We are looking to reach a final agreement for the delivery of these units and on payments, etc. We have an agreement for 90% of the (contract's) technical and financial aspects," Salcedo said in an interview late on Monday.

The Tocoma project aims to add over 2,000 MW of capacity in 10 generation units. Almost 60% of equipment has already been manufactured, so completing the first two phases is expected to take 14 to 19 months, he said.

In Macagua, the first two 80-MW units could be put back in service in 90 to 100 days after the contract addendum is signed, he added.

Since most of the equipment is available and was recently inspected by Venezuelan officials, the contract could lead to the much-needed first capacity expansion in years of Venezuela's electric grid. Currently, the grid is operating at a deficit, triggering frequent power outages and rationing.

"There are also components in the U.S., Germany, and Paraguay. We have conducted a comprehensive inventory to recover some of them," the executive said. IMPSA will use new technology to replace some equipment that cannot be sourced or was manufactured with technology now obsolete, he added.

Venezuela's electricity ministry did not immediately reply to a request for comment.

Washington is pushing a $100 billion energy reconstruction plan for Venezuela, but the deep deterioration of the country's grid, which operates at a fraction of capacity, is seen as a major obstacle to progress.

The National Assembly last week approved a reform of the country's electricity law in a preliminary vote. A final vote is expected soon.

Caracas and Washington are engaged in talks over how to release Venezuela's funds in accounts overseas to finance the most urgent power projects, sources involved in the discussions said. Foreign banks and potential suppliers are participating in the talks also, the sources said.