Editorial / Commentary / Opinion
VenEconomy : “Oversights”
destroying the country
There is not a sector, service or economic activity that has escaped sliding backwards light years since Chávez came to power, from the erstwhile efficient PDVSA, today immersed in inefficiency and unproductiveness, to the health system and the administration of justice, to the imminent collapse of the national electricity system that is threatening to plunge the country into darkness.
The extremes of bad management achieved by the Chávez administration are such that, within the space of less than two months, the President himself has had to admit “failures” in two sectors that are important in the everyday life of the population. The first was on September 19, when he declared an emergency in the health sector and admitted that, owing to an “oversight,” some 2,000 Barrio Adentro (primary health care program) modules were in a state of abandonment; and the second came this Sunday, October 25, when he admitted that the serious problems facing the country’s electricity system were due to “faults in planning and maintenance; we’re very careless.” Quite an admission, particularly for someone who has been ten years in office and who has had at his command huge amounts of petrodollars to use at his discretion, the like of which nearly no president of Venezuela and possibly of Latin America has enjoyed.
But this time Hugo Chávez is right. The chaotic state of the domestic electricity sector is due almost entirely to the lack of coherent planning in this area by his government as well as to the lack of maintenance and new investment in generation, transmission, and distribution carried over from years back and, particularly, from the past ten years.
The present crisis in the country’s electricity system is a direct consequence of the President’s policy of discarding any proposal or project that came from preceding administrations. This disastrous Chavista practice has resulted in: 1) coherent projects in the area of hydro- and thermoelectricity being discarded; 2) Edelca’s traditional managerial efficiency being consigned to oblivion; 3) one of the works of national pride, Guri, the country’s main reservoir and the second in Latin America, having eight of its 20 turbines out of service, thereby reducing its capacity by 20%; and, worse still, Guri’s turbine room being on the point of a collapse of unimaginable proportions, which could cut electricity generation by 60%, according to local press reports in Bolívar state; and 4) the already inefficient Planta Centro power station reducing still further its generating capacity and, according to press reports, in just one of its five turbines is operating, and then only at less than 60% of its capacity (400 Mw) at best.
The chaos in the electricity sector is also due to the Chávez administration’s irrationality in not only nationalizing the electricity companies that had been operating efficiently but also in dispensing with the industry’s managerial, professional, and technical talent for merely political reasons and replacing them with military personnel or politicians sympathetic to the regime but who have scant knowledge of management.
All of this has been combined with a bad habit that seems to be firmly entrenched in the ranks of Chavismo, the extremely opaque manner in which it handles the funds entrusted to it to administer. According to the experts, no one knows where 75% of the funds allocated to the electricity sector have been invested.
What the President did not come up with –yet again- were sensible proposals for solving the critical situation in the electricity industry. For example, it is not by threatening to cut off the supply of electricity to shopping malls that will restore power for the rest of the population, a measure that will simply leave thousands of people without jobs; nor is ordering those same shopping malls to have their own generators a solution to the collapse of the electricity system, first because the generation of electricity is a state monopoly and second because diesel generators are highly pollutant.
Announcing his third Investment Plan since 2007 isn’t the answer either, as it will more than likely come to nothing like its two predecessors, with the risk that Venezuela will be condemned to backwardness typical of the 19th century. The development of the country is won by governing and not by being hell bent on copying failed projects of involution.
VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. 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 VeneEconomy on 10/26/2009. Petroleumworld reprint this article in the interest of our readers .
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Petroleumworld News 11/02/09
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