NCPA - National Center for Policy Analysis


November 10, 2009

A country that has claimed the world's biggest oil reserves and is home to its fourth-mightiest river, the Orinoco, has recently been forced to ration both water and electricity.  Hugo Chavez, the leftist president, blames the profligacy of consumers and a drought caused by El Niño weather, says the Economist.

Independent experts and observers acknowledge the effect of lower rainfall that has cut the flow to the country's main hydroelectric dam (which provides three-fifths of its electricity) by a tenth.  These experts however maintain that the underlying cause is the government's failure to plan, maintain and invest in the necessary infrastructure, says the Economist. 

Only a quarter of the funds budgeted for power generation has in fact been spent on it, says Victor Poleo, former deputy minister for electricity under Chavez:

  • In 2007 the president compounded the problem by nationalizing what remained of the private power industry.
  • Since then there have been half-a-dozen national blackouts.
  • Meanwhile, demand for electricity has grown by an annual average of 4.5 percent.

Thermal plants cannot be used to take up the slack.  They have been neglected.  Four out of five turbines at the biggest of them, Planta Centro on the Caribbean coast, are out of action, says the Economist.

Chavez has called on Venezuelans to take quicker showers.  "Some people sing in the bath for half an hour," he told a recent cabinet meeting, broadcast live.  "What kind of communism is that?  Three minutes is more than enough!"

It is true that Venezuelans are not thrifty by nature.  But the government has hitherto done nothing to encourage them to conserve water or energy.  Utility rates have been frozen for most of Chavez's time in office.  The president faces crucial parliamentary elections next year and needs to woo voters.  But after ten years of neglect, there is no quick fix for crumbling infrastructure.  "There is no PR trick that will make the crisis go away," says Poleo.

Source: Observers, "Venezuela's energy shortage: Losing power," The Economist, November 5, 2009

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