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Editorial Commentary
VenEconomy:
From blackout to blackout
This year the electricity service in Venezuela has gone from bad to worse. It looks as though Venezuelans, in the times of Chávez with the highest oil prices ever, will be condemned to live from blackout to blackout.
All because the government, bent on its political agenda of building its brand of communism, has not even met the objectives and investments scheduled for the national electricity sector in its Economic and Social Development Plan of the Nation 2007-2013.
The government has ignored the different experts who have been warning that, unless it made the necessary investments in transmission and generation in order to meet the growing demand for electricity, the system would start to fail. And the fact is that, in the near decade that Chávez has been in power, not even 25% of the investments the sector needs have been made, with the result that all the combined cycle (gas-fuel oil) cycle projects for producing electricity are 18 months to four years behind schedule.
Today, everything indicates that the system is reaching the limit of its generation capacity.
However, last year when the system was on the brink of a crisis and its possible collapse was announced, the government’s brilliant response was to hand out energy-saving light bulbs and put the domestic electricity system under state ownership with the purchase of Electricidad de Caracas (EDC), the country’s largest private electricity utility, and Seneca, the electricity utility servicing Margarita Island.
As a consequence of these purchases, not only were resources spent unnecessarily instead of using them to speed up the investments the country urgently needed, but also, a year after the purchase, the services provided by these companies are showing clear signs of deterioration, a fate they share with all the companies that have passed into state ownership.
With his route map leading to communism, Chávez is being egalitarian in sharing out widespread blackouts the length and breadth of the country.
On April 29 this year, there was a widespread blackout in Caracas and 17 states that lasted several hours. Throughout the year, different parts of the country have been suffering from constant power outs, a situation that has resulted in protests by users becoming a daily occurrence. This week, there were failures in the electricity service in different parts of Caracas two days running.
According to Andrés Mata Axpe, Edelca’s former planning director, Venezuela’s electricity network urgently needs immediate capital investments to the tune of $12 billion in new generation and transmission infrastructure; and the National Electricity Industry Chamber, Caveinel, indicates that the electricity sector needs at least $5 billion a year in fresh capital over the next decade, which gives a total of $50 billion at current prices unadjusted for inflation.
Yet, while Chávez has more than enough money to invest in Russian weapons, there is no provision in the 2008 central government budget for the electricity sector.
VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
Editor's Note:This commentary was originally published by VenEconomy, on 07/23/2007. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 07/24/08
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