Oops! Caught Red Handed
Almost 100 undocumented Colombians traveling in three small buses were arrested a day ago at a National Guard “alcabala” in Barinas state.
Regime-friendly news media initially reported that a group of Colombian paramilitaries had been captured. Caracas Gringo speculated the Colombians more likely were traveling to Caracas and other cities looking for work.
But the “chavista” mayor of Santa Barbara de Barinas in Ezequiel Zamora municipality clarified overnight that the detained Colombians are not paramilitaries or illegals being smuggled into Venezuela.
Nope. They are gainfully employed workers on various cattle ranches in the municipality, and some have been “displaced” by the war in Colombia, an aide to the mayor explained.
The undocumented Colombians were “traveling in buses rented by the mayor’s office of Ezequiel Zamora Municipality in Venezuela,” says Edgar Mercharcano, the “regional coordinator of the Association of Colombians in Barinas,” according to news reports from Barinas.
“They were going to sign the Electoral Registry after obtaining their identity cards (cedulas de identidad) and then inscribe their names in the registry so they can vote in the 2010 elections,” adds Mercharcano.
The trip was organized by José Quintero, the “social promoter” for the Ezequiel Zamora mayor’s office.
Some questions the Attorney General’s designated prosecutors should ask, but probably won’t:
*Were the Colombians going to be given “cedulas” as foreign nationals legally residing in Venezuela, or were they going to receive the “cedulas” reserved for Venezuelan citizens? In other words, were they going to be naturalized illegally?
*Was there a quid pro quo? In payment for their legal residency or Venezuelan citizenship documents, were these Colombians required by the regime to vote for chavista candidates in te National Assembly elections?
*Who covered their lost wages for the one or two days they would be away getting their legal Venezuelan documents? The mayor’s office? The PSUV? Their employers?
*Who is Mercharcano? What is this individual’s role in all this? Is Mercharcano an “adviser” to the chavista” mayor’s office and/or the PSUV in Barinas?
The circumstances of this incident, and the individuals involved, suggest corruption, and illegal activities by elected chavista public officials to illegally secure Venezuelan residency and/or citizenship documents for undocumented Colombians provided they vote “chavista” in the next elections.
Tinariwen: Touareg Desert Roots Music
Caracas Gringo’s friends know about my addiction to collecting blues and roots music from all over the world; over 265,000 songs to date and counting…
Here are some rockin’ desert blues songs by Tinariwen, a band of Touareg nomad musicans from northern Mali:
Hugo in Honduras
Only a week ago, there was widespread praise for the “breakthrough” agreement to “end the political crisis” in Honduras. Witness the Washington Post’s editorial on 30 October, headlined “A Win in Honduras:”
“The stakes in Honduras’s political crisis have always been bigger than the country’s tiny size would suggest — and so it follows that the breakthrough engineered this week by the Obama administration is more than a minor diplomatic triumph.”
Some analysts also posted articles online discussing the “winners” and ‘”losers” of the crisis in Honduras, now that it was almost over.
But as Yogi Berra would say, “It ain’t over ‘til it’s over.”
President Hugo Chavez, Foreign Minister Nicolas Maduro and the other Bolivarian bozos who are trying at all costs to destabilize Honduras have realized belatedly that constitutionally/legally ousted President Manuel “Mel” Zelaya made a bad deal last week.
Kudos to Thomas Shannon, the US assistant secretary of state for western hemisphere affairs who brokered the agreement by which the Congress of Honduras will decide, after consulting with the Supreme Court and Attorney General of Honduras, whether or not to reinstate Zelaya to the presidency until new elections are held on 29 November 2009 and a new president assumes power.
Initially, Zelaya crowed victory and said he expected to return to the presidency “immediately.” But a week later, Zelaya is still stewing inside Brazil’s embassy in Tegucigalpa.
Even worse for Mel and his paymaster Chavez, Shannon clarified in an interview this week with CNN en Espanol that the US administration of President Barack Obama did not, at any moment in the negotiations, guarantee to Zelaya that he would be reinstated as president of Honduras.
“That’s not our decision. We cannot impose a solution. No country from outside can impose a solution. The only solution can come from Honduras,” Shannon told his interviewer.
The US official also explained the priority steps in the process of ending the political crisis.
“The formation of a National Unity Government is separate from reinstatement; that is, first comes the creation of a Verification Committee (which includes US Labor Secretary Hilda Solis, former Chilean President Ricardo Lagos, and two members of the dominant political parties in Honduras)… after that, comes the creation of the National Unity Government, and after that would come the issue of reinstatement. It is the Congress (of Honduras) which has to determine when this will occur and it is different and separate from the National Unity Government,” said Shannon.
Why should the Congress of Honduras decide Zelaya’s fate? What if the 29 November elections pass and Zelaya hasn’t been reinstated to power?
Every question CNN asked received the same answer from Shannon:
“It’s up to the Congress of Honduras to decide…the US has voiced its support for reinstatement, but at the end of the day the solution to this problem has to reside within Honduras, it has to be a decision that will survive in time and resolve the political problem in a peaceful way and that is why we decided to center the decision on (Zelaya’s) reinstatement in a Honduran democratic institution to ensure it is the Hondurans who at the end of the day will make the decisions, meaning it is not imposed from outside…The future of Honduran democracy is already in the hands of the Hondurans.”
And, tellingly, in response to a CNN question on why the US had not stepped in sooner to force a solution, Shannon said:
“Look, in diplomacy as in comedy timing is everything, meaning one has to know exactly when to push, and after four months the Honduran people were tired of this crisis…we also had to have the opportunity to work within the international community…with a multilateral focus to ensure that when we arrived it wasn’t only as the United States. But also as a representative working together with the OAS which brought behind us all the support of the imternational community.”
Zelaya apparently did not read the fine print of the agreement, or else his designated negotiators embraced an agreement which left Zelaya twisting in the wind; dumb and dumber.
Now Zelaya is whining that he was sandbagged. On 4 November he sent US Secretary of State Hillary Clinton a letter requesting that she clarify the Obama administration’s position.
Zelaya also is warning that if he isn’t reinstated immediately as president, he won’t participate in the National Unity Government. On 5 November, Foreign Minister Maduro warned that if Zelaya isn’t reinstated the ALBA countries – Venezuela, Cuba, Nicaragua, Bolivia, Ecuador – won’t recognize the democratic legitimacy of the new president.
Two observations:
First, it’s fairly obvious that Zelaya would never play fair if he is reinstated as president. Chavez bought and paid for him a year ago, or else Zelaya’s Foreign Minister Patricia Rodas would not have obtained the means to buy over $40 million worth of Honduran property in recent months. With Chavez’s certain support, Zelaya likely would seek ways to derail the election, and probably would use his lame duck interregnum from the elections in November until the transfer of power at the end of January 2010 to undermine its democratic institutions.
Second, given that the likely winner at this point is opposition leader Porfirio Lobo of the conservative National Party, it’s very improbable that Chavez and his regional thug associates would recognize and/or cooperate with the new Honduras government. Instead, it’s more likely that Chavez will unleash a sustained clandestine offensive to destabilize Honduras.
Chavez always telegraphs his punches. At the recent ALBA summit in Bolivia, Chavez warned darkly of an “insurrection” in Honduras if zelaya was not returned promptly to power. Nicaragua’s President Daniel Ortega, another bought-and-paid-for thug of the Boliavrian revolution, also warned of an insurrection growing in the rural Honduras.
The violence is already starting. In the past month a bomb exploded in a shopping center (a second device was defused), the nephew of interim President Roberto Micheletti was abducted and later found dead, hands bound behind his back and shot in the head up close, execution-style. The father of a Honduran senior national security official also was abducted. And this week a hand grenade was hurled at a leading radio station identified by Zelaya’s people as a “coup supporter.”
The Chavez regime and its stalwart Cuban “advisers” are determined to destabilize Latin Americas, all the way from the Rio Bravo to Tierra del Fuego. The Bolivarian revolution has grown deep roots in Bolivia, Ecuador and Nicaragua. Chavez has paid billions more for the strategic “friendships” of the Kirchners in Argentina. He is cozier than flies on garbage with the Castro regime. The Caricom countries enlisted in the Petrocaribe initiative always back Chavez at the OAS.
And the countries not yet aligned with Chavez – Colombia, Peru, Panama, Costa Rica, Guatemala and Mexico – are in his gunsights.
The Chavez regime is actively working with the FARC to destabilize Colombian democracy. Senior nominally “democratic” Colombian figures like Senator Piedad Cordoba and former President Ernesto Samper are cooperating with Chavez too. The Chavez regime’s political/logistical support for the FARC is so notorious that the US Treasury’s OFAC in September 2008 designated three of his closest and most trusted security czars – Ramon Rodriguez Chacin, Hugo Carvaval and Henry Rangel Silva – as Tier II kingpins for materially collaborating with the FARC.
Chavez’s clandestine Bolivarian agents materially/tactically supported the extended street violence in Bolivia for several years before Evo Morales was finally elected president. The Chavez regime also intervened in Ecuador (before Rafael Correra was elected), and more recently in Peru (the indigenous protests in which numerous captive police officers had their throats cut by indigenous radicals), and in Honduras.
The cash to fund instability regionally is transported from Caracas in diplomatic pouches to Bolivarian embassies which then dispense the cash. The operation is very liquid, without receipts of any kind, and thus is impossible to track.
Of course, the absence of any accounting controls means that a large percentage gets skimmed by the Venezuelan actors who make the payments, and the actors who receive the money. Ask Patricia.
Honduras is ripe for more instability. The majority of the Honduran people are very poor. The country is a major gateway for international drug traffickers transporting cocaine and heroin from Colombia/Andean region to Mexico and the US.
Honduras, like all Central American democracies, also has dangerous internal security problems due to the unchecked predations of the “Maras.” The porous Honduran borders with Nicaragua and El Salvador allows drug traffickers and “Maras” to operate with great impunity.
Add to this mix the probable presence in Honduras of FARC operatives working alongside Bolivarian/Cuban intelligence agents, and it’s obvious that the next democratically elected president of Honduras will confront immense security challenges.
Will the Obama administration support the new democratic government of Honduras when it is challenged by the Chavez regime in 2010? How about the OAS?
Lots of people in Washington, DC have been taking political potshots at US Assistant Secretary Shannon in recent months.
For example, Republican Senator Jim Demint has placed holds on Shannon’s appointment as US Ambassador to Brazil, and also on Arturo Valenzuela’s appointment as Assistant Secretary of State. These holds have made it more difficult to manage problems in the region like Honduras and Chavez. The latest edition of the Menges Report also hammered Shannon – unfairly, in this blogger’s view.
Shannon reportedly also has faced internal problems arising from differences of ideological perspective/interpretation and/or inexperience between officials in the Obama administration charged with handling relations with Latin America.
But the agreement that Shannon brokered very deftly put the onus for solving the political crisis in Honduras where it always belonged in the first place: in its Congress, in consultation with the Supreme Court and Attorney General of Honduras.
However, it still ain’t over ‘til it’s over. And it ain’t over yet.
One Hundred Unemployed Pawns
Almost 100 undocumented Colombians traveling in three small buses were detained today at a National Guard checkpoint in Barinas. Initial news reports tagged the detained Colombians as “presumed paramilitaries.” Subsequently, corrected reports said only that the Colombians were undocumented and traveling in a group.
The Chavez regime may still attempt to portray these hapless Colombian nationals as paramilitaries to advance its own political agenda. But it’s more likely that the Colombians were en route to Caracas and other cities where they hope to find jobs. As bad as Venezuela’s economy is today, there are still more and better-paying job opportunities for poor Colombians in Venezuela than in their own country.
Tens of thousands of undocumented Colombians come into Venezuela each year. The majority use long-established smuggling routes operated by illegal businesses based in the “barrios” of Caracas and other cities like Maracaibo. These smuggling enterprises have been transporting people and goods (encomiendas) in both directions literally for decades.
The busiest time of the year is between late November and late January. The main smuggling routes run from Norte de Santander and the Colombian Goajira region through Maicao, via Maracaibo and cities in Lara and Barinas.
Caracas Gringo knows the “owners” of a half-dozen of these groups. Perhaps not surprisingly, all six are women. And their clients are mostly women; seven or eight out of every ten undocumented Colombians traveling in both directions are women who labor as “domesticas” in Venezuelan homes.
The Christmas season “fee” this year averages about Bs.F. 1,000 for undocumented Colombians traveling home for the holidays, up to BsF2 million for the return trip in January 2010. Return trips cost almost double because the smugglers pay bribes to the Venezuelan National Guard at every stage of the journey.
The journey in both directions is made in passenger vehicles, small trucks and buses. The smugglers like to “consolidate” their shipments of undocumented Colombians, because the larger the group, the greater the profits per head.
Trucks or buses will transport the incoming undocumented Colombians to Maracaibo, where they transfer to passenger vehicles (usually taxis) for the drive across the Lake Maracaibo bridge. The taxis may travel as far as Barquisimeto, where the undocumented Colombians transfer to buses for the rest of the journey to Valencia or Caracas.
The smugglers also use safe houses in cities like Maracaibo and Barquisimeto to hide the undocumented Colombians for several hours or overnight until the pre-arranged transportation arrives.
En route to Caracas from Maicao, the smugglers moving groups of undocumented Colombians may encounter a dozen National Guard checkpoints (“alcabalas”) at a minimum. And at every checkpoint, the National Guard officer or sergeant in command is paid in cash.
And sometimes, way out in the boondocks near Maicao, some National Guard troops also abuse women who attract the interest of the guardsmen.
The undocumented Colombians arrested today almost certainly are not paramilitaries. But bad timing and worse luck has made them convenient pawns of the Chavez regime as it strives to destabilize Tachira state, and also stoke a conflict with the government of President Alvaro Uribe Velez.
A Bolivarian Coup in Tachira
President Hugo Chavez appears to be trying to provoke the government of Colombia into a potentially violent confrontation which Chavez cannot possibly win, and which Colombia’s government is striving to avoid at all costs.
But with Chavez, appearances are always deceiving.
President Chavez and his gangster cronies certainly are determined to destabilize Colombia’s democracy.
But the Chavez regime’s increasingly shrill accusations that Colombia is seeking to destabilize the border with Venezuela are baloney.
Chavez’s real objective is to create conditions of violence and instability that will force Tachira Governor Cesar Perez Vivas to abandon the office he won in democratic elections, and join other exiled democratic opposition leaders like Zulia’s Manuel Rosales in Peru.
President Chavez telegraphed his intentions less than a day ago, warning on national television that Governor Perez Vivas should pack his bags and depart for Lima quickly.
Admiral Iván Carratú, former director of the Instituto de Altos Estudios para la Defensa Nacional and former commander of the Presidential Guard (Casa Militar) during the second administration of former President Carlos Andres Perez (1989-93), predicts that President Chavez soon will designate Tachira a “zone of conflict.”
Under the Armed Forces Organic Law reformed in October by the National Assembly, President Chavez can dump all elected public officials in a given area by declaring it a zone of conflict, which empowers him to replace elected civilian officials with military commanders.
Placing Tachira under military command will further Chavez’s goal of abusing/ignoring the rule of law to politically persecute/prosecute elected opposition leaders.
One by one, Chavez is illegally toppling the opposition leaders who won municipal and state elections just two years ago. The first to go down, and into exile, was Manuel Rosales. It’s likely that Perez Vivas will join him soon.
But placing Tachira under military command will not make the state safer or more secure. If anything, appointing military officers to run local and state governments in Tachira will significantly expand the opportunities for these military officers to enrich themselves via corruption.
It’s a fact that everywhere that President Chavez has appointed a military officer to fill a government post during the past 11 years, the results invariably, and almost always, have included extraordinarily incompetent management, nepotism, theft and corruption.
It won’t be any different if Chavez places Tachira’s state and local governments under complete military control. If anything, the chaos and violence on Tachira’s border with Colombia will get much worse.
Any military officers appointed by Chavez to strategic border command posts, especially in “zones of conflict,” certainly will be vetted ideologically for the job. This means that they will maintain friendly relations with the FARC, ELN, FBL and other irregular groups, but they will neutralize the state’s civilian police forces. It also means that the military commanders appointed to govern Tachira will support PSUV political activities in Tachira, but will actively disrupt/repress opposition political activities.
The opportunities for “negocios” will be endless for military officers in command of Tachira’s state government and its local governments. The standard commission charged by the military mafia running practically everything in the Chavez regime today is 15%, upfront and in cash.**
But Tachira will remain unsafe, dangerous and lethal for civilians on both sides of the border. The FARC, ELN and FBL will continue to operate freely in Tachira, kidnapping and extorting Venezuelan civilians. The Chavez regime will blame Colombian paramilitaries for these crimes, but will never offer proof, and the occasional “paracos” arrested by Venezuelan forces likely will be ordinary criminals and/or convenient cannon fodder.
**Of course, higher-ups like Public Works and Housing Minister Diosdado Cabello and his longtime partner, Science and technology Minister Jesse Chacon, get even higher fees. For example, the turnkey contracts worth over $4 billion that were awarded only a few months ago without any bidding to build two thermal power generation plants awarded a few months ago reportedly were substantially over-priced. Caracas Chronicles has an eye-opening analysis of the power plant scam. The apparent 39% “sobreprecio” is mostly commissions payable in Venezuela and Spain.
Pdvsa’s Rafael Ramirez: Heavy Nonsense in Margarita
Petroleos de Venezuela is hosting the Third Heavy Crude Congress on the island of Margarita from 3-5 November.
Barring an appearance by President Hugo Chavez, the chief master of ceremonies is Energy Minister/Pdvsa president Rafael Ramirez.
The Heavy Crude Congress was moved to Margarita from Puerto La Cruz-Barcelona because daily power outages in that urban center in Anzoategui would have disrupted the event.
Foreign oil companies are keen on developing oil and gas projects in Venezuela – if only the Chavez regime and Ramirez’s Pdvsa would stop relentlessly blocking all possibilities of progress.
Ramirez was upbeat at the inauguration of the Heavy Crude Congress in Porlamar on 3 November. But an aura of “dead man walking” hangs over Ramirez these days.
Ramirez has served Chavez as energy minister and president of Pdvsa since mid-2002.
But he doesn’t have hardly anything to show on his curriculum vitae in terms of anay major completed infrastructure to produce and refine crude oil, extract natural gas to supply local consumption and export LNG, and increased capacity to generate and transmit electricity nationally.
That’s right; practically nothing at all to show for the tens of billions of dollars Pdvsa has burned since 2003 after Chavez purged some 20,000 veteran oilmen and women from the company.
It took Ramirez less than seven years to preside over the destruction of Pdvsa and the national power industry. Someday, perhaps in a penal court, Ramirez will say he only followed the orders of President Chavez.
Way back in mid-2006 at an international oil conference in Maracaibo, Ramirez said in a speech that all the decisions about oil, gas and power were made only, and exclusively, by President Chavez.
But Ramirez certainly can talk a good game, and he was on a roll in Porlamar on 3 November.
Venezuela’s crude oil production capacity will rise to 4.25 million b/d in 2015 and 6.86 million b/d in 2021, Ramirez announced during inaugural remarks to several hundred attendees.
Almost all of the new crude production capacity which Pdvsa plans to commission over the coming 22 years will be developed in the Orinoco oil belt, added Ramirez.
Ramirez said the Orinoco oil belt “will be the oil region that will supply the barrels in the future and will help us achieve the production goal of 6,662,000 b/d of crude production by 2021.”
Orinoco extra-heavy crude production currently averages 532,000 b/d, he said (down from over 610,000 b/d before Chavez stole the upgraders in May 2007).
The joint ventures Pdvsa is structuring with strategic foreign partners will increase the Orinoco oil belt’s extra-heavy crude production capacity by 1,324,000 b/d over the coming seven years to 1,856,000 b/d by end-2015, Ramirez said.
A further 2,810,000 b/d of extra-heavy crude production capacity will be developed in the oil belt between 2016 and 2021, he added.
The attendees applauded politely, encouragingly. Many are hopeful that President Chavez and Pdvsa are finally improving some of the terms and conditions for companies interested in bidding on seven production blocks Pdvsa is offering in the oil belt’s Carabobo section.
But Ramirez’s numbers merit a closer look.
Ramirez announced that Pdvsa plans to increase the oil belt’s extra-heavy crude production capacity by 4,134,000 b/d over the coming 12 years, for an annualized increase in production capacity of 344,500 b/d each year from 2010 to 2021.
Ramirez didn’t say anything about new upgraders.
But for purposes of discussion, let’s use the Pdvsa’s (and Ramirez’s) public statements about the Carabobo bidding process as a guideline: Pdvsa wants to develop between 1.2 million b/d and 1.4 million b/d of production capacity in the Carabobo section. Pdvsa also wants to build at least three new upgraders with a combined processing capacity of 600,000 b/d of 32-42 API syncrude. In effect, roughly one-half of Pdvsa’s planned Carabobo production would be processed into syncrude by upgraders.
So let’s assume that Pdvsa expects to create joint ventures to develop 2 million b/d of new upgrader processing capacity over the coming 12 years, or 10 new upgraders with capacities of 200,000 b/d each.
What would all this huge growth in extra-heavy crude production and upgrader capacity cost Venezuela?
Even veteran oil experts (which Caracas Gringo is not) have a difficult time answering this question with any accuracy.
Ramirez/Pdvsa toss out numbers with reckless indifference to the truth, and costs depend on the nature of the project – whether it’s only upstream production, or only downstream upgrading, or an integrated production/upgrader project.
Ramirez indicated in September that an integrated production/upgrader joint venture in the Carabobo or Junin sections would cost at least $25 billion. But given Ramirez’s fondness for bloated promises and fudged numbers, real integrated project costs easily could work out to $30 billion or higher.
So we have 2 million b/d of new integrated extra-heavy crude production/upgrader capacity at a cost of $25 billion per 200,000 b/d project, or $250 billion worth of integrated Orinoco joint ventures.
Additionally, per Ramirez, we have another 2.1 million b/d of new extra-heavy crude production capacity which, lacking associated upgraders, presumably would be blended with light crudes to yield a Merey 16 heavy crude.
Is there sufficient light crude production capacity in Venezuela to assure that up to 2 million b/d of extra-heavy crude with an 8.5 API can be mixed into a Merey 16 blend?
Let’s assume for discussion that each 200,000 b/d project requires at least $10 billion of investment, or $100 billion overall.
This off-the-cuff arithmetic based on Ramirez’s public statements on 3 November at the Margarita Heavy Crude Congress, and over the past six months or so, works out to at least $350 billion of total capital investment in the Orinoco oil belt over the coming 12 years, or $29.1 billion per year.
Pdvsa’s share of this investment, based on its 60% controlling ownership rule, works out to at least $210 billion, or $17.5 billion annually over the 12 years from 2010 through end-2021.
But Pdvsa’s investment budget for 2009 is only $15 billion, and planned investments in 2010 are $16 billion, according to Ramirez.
Moreover, Pdvsa currently is cash-tight and borrowing like mad.
Ramirez said on 3 November in Porlamar that Pdvsa is considering another $3 billion bond issue before end-2009 to pay down over $4.5 billion in past-due debts to oil services companies and other contractors
Ramirez said the possibility of another bond issue is being discussed with the Finance Ministry.
Pdvsa placed over $3.26 billion of Petrobono 2014, 2015 and 2016 bonds on 28 October.
But the issue only succeeded because the National Assembly hastily reformed the Central Bank Law to authorize the Central Bank to buy government debt for the first time in the bank’s history.
Less than a week after these bonds were placed, they are trading at only 55% of face value in secondary debt markets, indicating that international investors are souring on Venezuelan debt.
Pdvsa’s debt totaled over $23 billion as of 31 October 2009, compared with $15 billion on 31 December 2008.
Another $3 billion bond issue would raise Pdvsa’s debt to over $26 billion by end-2009, for a one-year increase of $11 billion or over 73.3%.
But a Barclays Capital report dated 30 October 2009 predicts, based on talks the report’s authors had with Chavez regime finance officials, that the Chavez regime and Pdvsa likely will borrow another $22 billion in 2010 – just as Pdvsa is supposed to be accelerating all of these ambitious Orinoco joint ventures.
Ramirez has been talking, talking, talking for seven years – and his only real “achievement” has been to preside over Pdvsa’s destruction.
But Ramirez’s BS reportedly has worn thin on Chavez.
Change may be in the offing at Pdvsa, not that it will make any difference because – as a reader points out sagely in a comment to an earlier post on Pdvsa – Chavez simply will replace one thug with another thug.
The Scent of Blood
Everyone is on edge in Caracas nowadays, and with good reason.
The scent of blood is in the air.
Criminal violence grows worse by the day.
Independent security experts estimate that over 14,000 persons will be murdered nationally in 2009.
Up to 17 million unlicensed handguns and other light weapons are circulating in a country of about 27 million inhabitants.
International experts say that Venezuela has the most lethally violent prisons in the Americas.
Just a couple of days ago, the residents of Palo Verde in eastern Caracas blockaded streets in their neighborhood to protest the unchecked criminal violence they suffer daily.
Some of the Palo Verde protesters threatened to start dumping the corpses of murder victims at the entrance to the offices of the Attorney General of the Republic.
But dumping the bodies of murder victoms outside the AG’s office won’t make a difference.
President Hugo Chavez isn’t interested in the criminal violence engulfing Venezuela.
Chavez is too busy crafting violent Bolivarian strategies and tactics to crush his enemies at home and abroad.
Chavez is working hard to destabilize Colombia ahead of its presidential elections in 2010. He is also trying to destabilize Peru and Honduras. We’ll address the Chavez regime’s regional destabilization efforts in a future post.
Chavez’s violent plans for Venezuela are of greater immediate concern.
Public Works and Housing Minister Diosdado Cabello, the second most powerful figure in the Chavez regime after his president, to whom Cabello continuously swears total fealty and obedience, has been ordered to create 72 “camps” (“campamentos”) in the Greater Caracas Area that will be manned exclusively civilian military reservists.
These “Tricolor Camps” will be manned by Bolivarian reservists, who by law take orders only from President Chavez. They will be given decent housing, and will permanently receive military training including the use of assault rifles and other light infantry weapons.
Cabello said these “Tricolor Camps” will serve as Bolivarian bastions to “defend the people (“pueblo”) and the revolution.”
It can be assumed that only the best-trained and most highly motivated Bolivarian reservists will be based in these “Tricolor Camps.” But will all of these elite reservists be Venezuelan citizens?
Recently approved reforms to Venezuela’s armed forces legislation allows foreigners to serve in the conventional armed forces and the military reserve.
The Bolivarian militia’s members already include Marxist gunmen associated with groups like the Tupamaros, the Carapaicas, the Alexis Vive Command, and La Piedrita, among others. The PSUV’s radical faction also has a strong presence in the Bolivarian militia.
But the reforms to the country’s armed forces legislation opens the door for the arrival of new radical “recruits” from Colombia, Ecuador, Bolivia, Nicaragua and other countries.
Members of the FARC, ELN and other militant groups in the region also might be persuaded to join the Bolivarian reserve; and why not Islamist militants too?
President Chavez is publicly on record as supporting the Iranian regime’s goal of “erasing” the state of Israel from the map of the world.
Caracas will soon have 72 “Tricolor Camps” strategically positioned throughout the city.
Caracas Gringo knows of two: the old public market in the heart of Chacao, and the undeveloped land near Sante Fe where Makro once planned to build another hyper-market.
In a civil conflict scenario, these two locations would be strategically/tactically vital for a despotic regime determined to maintain control and power at any cost.
It’s a safe bet that the Chavez regime plans to create more “Tricolor Camps” in other cities over the coming months.
Meanwhile, the Interior & Justice Ministry announced on 3 November that the new National Police will start to deploy soon in Caracas and other cities.
Little is known about this new Bolivarian police force, but absolute loyalty to the revolution and active membership in the ruling PSUV party reportedly are among the principal requirements for employment.
The AG’s office operates as the chief executioner of every political whim, and abuse, which pops into President Chavez’s head. The Supreme Court is the president’s faithful judicial Poodle. The regime’s Bolivarian judges issue decisions based on “orders” they receive from above, when they’re not dispensing checkbook justice.
Given these precedents, what role will be played by the new National Police in the official security establishment’s expanding primary mandate of crushing any dissent?
But it doesn’t stop there.
The Chavez regime is creating an extensive civilian espionage network all all levels of society, working through the PSUV patrols, the Communal Councils, Bolivarian Circles and other “agents” of the revolution to deploy people whose intelligence “jobs” will be to listen to what others say – and report the “humint” to their higher-ups.
But this “popular” intelligence network is only one element of the Chavez regime’s plans to restructure and expand the state’s intelligence services.
President Chavez is determined to create a National Intelligence Service (SIN) that would be modeled in many respects on the Cuban regime’s General Intelligence Directorate (DGI).
Division General Hugo Carvajal, the current director of the Defense Ministry’s military intelligence service (DGIM), reportedly is a top candidate to serve as the first director of the SIN.
Imagine Carvajal, whom the US Treasury designated a drug kingpin in September 2008 for actively cooperating with the FARC, running the Bolivarian regime’s planned new national intelligence service.
President Chavez is forcefully clear about his intentions.
In recent speeches to the Bolivarian faithful, Chavez has thundered that “those who ruled Venezuela” before the revolution “will never again” hold any political power.
Chavez also has urged the National Assembly to accelerate the erasure of every last piece of legislation associated with the Fourth Republic.
Since April 2002, Chavez has warned repeatedly that he would “never again…be surprised (or) caught unprepared.”
The president’s chief thug, Diosdado Cabello, also has warned a few times in the past couple of years that any sign of violence directed against the revolution would be crushed immediately and without mercy.
Not be a naysayer, but the threats of Chavez, Cabello and the regime’s other senior gangsters hint that this is not a group that will transfer power democratically to anyone, even if they are whipped soundly in democratic elections.
Chavez clearly is lowering the bar of political violence to dangerous new levels.
Times are bad now. The economy is in the dumps, inflation and devaluation pressures are growing mightily, there’s zero real private investment on the horizon, structural unemployment is increasing apace with a young population’s growth.
But it’s going to get worse. Consider:
*Pdvsa is a broken company. The economic backbone of the state is snapped. Pdvsa’s crude production capacity has plunged from about 3.5 million b/d in 1999 to about 2.2 million b/d today. Its refineries break down all the time. The company’s payroll has ballooned from about 20,000 (post-2003 purge) to about 90,000 today, but Pdvsa produces less oil. Moreover, Pdvsa has not completed even one major new project since 2003 – zilch, nada.
*Venezuela faces at least five long years of daily power rationing and daily unexpected outages because the Chavez regime hasn’t invested in maintenance or new power projects for a decade. The 2,000MW Planta Centro thermal power generation plant is junk destined only for scrap; it cannot be salvaged, even minimally. And the 10,000MW Guri hydroelectric power complex is at risk of catastrophic failures.
*The basic steel and aluminum industries lie in ruins. Billions of dollars are at risk of being lost forever. The Orinoco River has been grotesquely contaminated by state-owned Bauxite producer Bauxilum.
And how is Chavez responding to these crises which he is responsible for creating?
For starters, Chavez claims that Venezuela’s growing crises in oil, gas, power, security and everything else are the fault of the “pueblo” and its “capitalist consumerism.”
But Chavez isn’t going to change his ways and chart a new course for his corrupt revolution.
Instead, President Chavez is preparing his armed militia praetorians to defend him from the people.
In some recess of his evil mind, Chavez knows that a reckoning with his “pueblo” will land on his front doorstep at some point in the future.
Because in everyone’s life, sooner or later, s*** happens.
Train Wreck at Pdvsa
The Energy Ministry and Pdvsa have been Rafael Ramirez’s fiefdoms since mid-2002.
Ramirez’s in-laws, headed by former Supreme Court Justice Hildegaard Rondon de Sanso, have made personal fortunes since Ramirez has been the top “oilman” in the Bolivarian revolution. His brother-in-law, Baldo sanso, reportedly has profited hugely doing bond “negocios.” Many of Ramirez’s blood relatives also have prospered greatly.
Ramirez has been the Energy Minister/Pdvsa president for seven years. He has persevered by being more loyal to President Hugo Chavez than anyone else, more radical, and more revolutionary. Pdvsa “es roja, rojita,” he boasted repeatedly during the 2006 national election. Ramirez always has been out there on the fringes of the “rojo rojito” zealots in the regime.
And while oil prices were rising, Ramirez also easily satisfied all of Chavez’s demands for dollars at any time, for any notion which popped into the president’s head.
But Ramirez doesn’t know anything about oil and gas, and he certainly has no management capabilities besides wearing natty business suits and red ties.
Venezuela’s oil, gas and power industries have collapsed completely on Ramirez’s watch.
Pdvsa’s effective crude oil production capacity has dropped to about 2.3 million b/d at best, compared with over 3.5 million b/d in 1998. Venezuela’s domestic gas deficit now averages over 1.5 billion cubic feet per day compared with 1.2 billion cf/d three or four years ago.
Pdvsa’s refineries – Amuay, Cardon, El Palito and Puerto La Cruz – are falling apart. All of Pdvsa’s programmed maintenance activities at three refineries have been suffered frequent delays and postponements over the past several years. And dozens of workers have been killed or injured in refinery accidents since 2005.
Pdvsa has not completed even one major project involving the production and refining of crude oil in the seven years that Ramirez has been “managing” the company. Pdvsa also has failed to complete any gas-related projects.
And Venezuela’s national power grid has finally collapsed in 2009 – a collapse that was foretold by Ramirez’s predecessors at the Energy Ministry in 1999, in 2002, and again in 2003 after Ramirez was the Energy Minister.
Venezuela faces at least five years of daily power rationing, according to studies by independent experts.
Ramirez is under immense political pressure from within the regime to get something moving in the oil and power sectors. The Energy Minister has many detractors within the regime besides Cabello, and most have a military background.
Will President Chavez sack Ramirez any time soon?
Less than two weeks ago, Chavez unceremoniously fired Corpoelec President Hipolito Izquierdo and created a new Power Ministry to oversee the power industry.
The Isea brothers, who have a military background but are fierce competitors/enemies of the diosdado Cabello group, reportedly were among the chief proponents of creating a new ministry for the power sector.
Theoretically, the president’s action effectively strips Ramirez of 100% of his authority over the power sector. But in practice, the new Power Ministry doesn’t have any money yet, because it depends on the central government and Pdvsa for its budget.
The new Power Ministry won’t solve the power crisis. The new Power Minister, PSUV National assembly Deputy Angel Rodriguez, doesn’t know anything about power and apparently has never managed anything which is not political.
A cynical wag remarks that Rodriguez “might know how to screw in a fresh light bulb, but that would require turning the bulb clockwise to the right, which might short circuit his leftist brain.”
Solving the power crisis quickly would require at least five years of intense effort, over $20 billion of infrastructure investment, an intelligence power development plan which responds to the country’s real needs, technical knowledge of the power industry, and solidly professional management capabilities.
But the Chavez regime possesses none of these material and professional qualities.
And meanwhile, the problems at Pdvsa are growing larger by the day.
Surely, a state-owned oil company with over 300 billion barrels of crude oil reserves and over 170 trillion cubic feet of natural gas (according to President Chavez) cannot go broke. After all, oil and gas prices already are back into the seventies, and certainly will rebound more robustly in the not-distant future.
Perhaps so; but Pdvsa’s more immediate problem – and Ramirez’s too – is the company’s demonstrated inability since 2003 to get any of its major crude production, refining and gas projects off the ground.
At the end of 2005 Pdvsa published a six-year oil and gas investment plan it called “Siembra Petrolera.” Four years after its initial publication, not a single one of the plan’s planned projects has been launched.
President Chavez since 2005 has voraciously nationalized foreign-owned oil and gas assets, starting with the 33 oilfield operating service contracts signed in the 1990s, followed by the four Orinoco upgraders, and finally the oil services sector.
At the same time, Pdvsa has signed dozens of bilateral agreements since 2005 with oil companies from China, Iran, Russia, Cuba, Belarus, India, Vietnam, Brazil, Spain, Indonesia, Syria, Argentina, Uruguay, Paraguay, Ecuador, Bolivia, etc.
But Pdvsa’s biggest agreements by far, at least in financial terms expressed on paper, are with Russia, China and Iran. Deals reportedly worth over $50 billion have been signed and/or are being discussed with the Russia Consortium (LUKoil, Gazprom, TNK-BP, Rosneft and Surguneftegaz).
Pdvsa also has signed agreements with CNPC and other state-owned Chinese oil companies which reportedly are worth over $60 billion on paper. And the agreements between Pdvsa and Petropars of Iran reportedly are worth a further $30 billion or so, on paper.
But the proof is in the doing, and not the tiresome redundant announcements of big new oil and gas projects which don’t materialize.
The coming four months could be the end of Ramirez’s reign at the Pdvsa – assuming Chavez hasn’t already decided to give him the boot. Caragas Gringo is told that Cabello is doing all he can to persuade the president to fire Ramirez.
Alternatively, Ramirez could re-energize his political fortunes with Chavez.
After three postponements and almost a year’s delay, Pdvsa finally will accept bids on 28 November 2009 for the seven production blocks it is offering in the Orinoco oil belt’s Carabobo section.
Pdvsa expects to create joint ventures to develop at least 200,000 b/d of extra-heavy crude production capacity in each block, and build three or four new upgraders with a combined capacity of 600,000 b/d to 800,000 b/d. These planned joint ventures would start to be commissioned as soon as 2012.
Ramirez says that Pdvsa will increase the Orinoco oil belt’s crude production capacity from 610,000 b/d today to as much as 2 million b/d by 2012-2014.
But this does not include a further 1.42 million b/d to 1.4 million b/d of extra-heavy crude production capacity that would be developed by joint ventures mainly in the oil belt’s Junin section, where the Russia Consortium, CNPC, Repsol and other “strategic” favorites of the Chavez regime currently are discussing with Pdvsa.
Very large production numbers, on paper – and very substantial estimated development costs.
Ramirez says developing the Orinoco production and upgrader ventures Pdvsa is considering will cost at least $100 billion over the coming five years.
But will Pdvsa have the capital? In the near-term, meaning at least 2010 and perhaps also 2011, the answer appears to be no. Pdva’s earnings have declined significantly in 2009, while its total indebtedness including new borrowings, unpaid bills to oil services companies and labor costs have increased sharply.
Ramirez says confidently that Pdvsa will easily finance over $15 billion of planned capital expenditures (capex) in 2009 and a further $16 billion of capex in 2010. These capital expenditures of $31 billion in 2009-2010 form part of Pdvsa’s plans to spend about $130 bn on new crude oil production, refining and gas ventures between 2009 and end-2014. But Ramirez’s boasts ring hollow. The available numbers on Pdvsa hint strongly at a company already in deep, and growing, financial and operational difficulties
Ramriez says that Pdvsa’s total planned capex over the coming five years includes about $100 billion mainly in the Orinoco oil belt, and $15 billion for the construction of three new refineries with a combined processing capacity of over 500,000 b/d, plus modernization and expansion capex at the El Palito, Puerto La Cruz and the Amuay-Cardon refineries on the Paraguana peninsula. It also includes a further $15 billion of capex for offshore gas production/liquefied natural gas projects in eastern Venezuela.
But barring a swift and sustained return to the high oil price levels seen in the first months of 2008, it’s unclear where Pdvsa will secure the funds required for its ambitious capex plans.
Pdvsa has not issued any financial statements at all in 2009. However, a Finance ministry report delivered to the National Assembly in September 2009 says that Pdvsa’s total pre-tax income was $13.6 billion during the first three months of 2009, down 23.6% from $17.8 billion of pre-tax income reported for the first three months of 2008.
Pdvsa’s after-tax profit fell even more sharply than income during the first quarter of 2009 to $1.6 billion, a drop of 54.3% pc compared with $1.9 billion of after-tax profit reported for the first three months of 2008. The price of Venezuela’s oil exports averaged $40.14/bl during the first three months of 2009, off 52.8 pc from an average price of $85.19/bl during the first three months of 2008. The ministry report attributed the steep fall in revenues and profit during the first three months of 2009 to sharply lower oil prices and OPEC-mandated crude production cuts which further reduced export earnings.
The Finance ministry report also says Pdvsa’s costs were slashed by 55.6%, to $11.8 billion during the first three months of 2009 compared with the same period in 2008. But it does not provide any explanation for the steep drop in profit.
A second central government document – the proposed budget for 2010 – sheds more light on Pdvsa’s precarious financial situation. In the introduction to the budget submitted to the National Assembly in October 2009, the Finance ministry estimates that Pdvsa’s fiscal contributions to the national treasury will total about $20 billion for all of 2009 based on average oil export price of $50/bl. This represents a decline of 47.7% compared to the $38.3 billion of income taxes, royalties and other fiscal transfers to the government reported by Pdvsa in 2008 when the average price of the country’s oil exports was $86.bl.
As Pdvsa’s income and fiscal transfers have collapsed in 2009, its total debt has climbed over 53%, from $15 billion at end-2008 to over $23 billion as of 31 October 2009, including its recent $3.2 billion bond issue. But this bond issue – which reaches maturity in 2014, 2015 and 2016 – succeeded only because the National Assembly hastily reformed Venezuela’s Central Bank Law to authorise the Central Bank for the first time in its history to buy government debt bonds. Pdvsa finance officials say it is possible the company could float another $3 billion bond issue before end-2009, which would raise its total debt to $26 billion.
The central government’s total debt also has climbed hugely so far in 2009. In all, the government has borrowed at least $20 billion between 1 January and 31 October 2009, including over $9 billion borrowed directly by Pdvsa. However, a report issued 30 October 2009 by UK investment bank Barclays Capital forecasts that the total debt of the Bolivarian republic of Venezuela will increase to at least $97.9 billion by end-2009 from $64.7 billion at end-2008, up $33 billion or 51% year-on-year.
As a result, the Venezuelan government’s total debt, expressed as a percentage of the country’s gross domestic product, will grow from 27.6% of GDP at end-2008 to 39.2% at end-2009.
Venezuelan government debt is forecast to continue growing rapidly in 2010, since the government plans to issue up to $22 billion in new debt next year, including about $10 billion of bonds denominated in local currency (the Bolivar), and another $12 billion denominated in US dollars, according to Barclays. The Barclays report says its borrowing estimates for 2009 and 2010 are based on data provided by Venezuela’s Central Bank.
If these borrowing estimates are accurate, the Venezuelan government’s total debt could climb to $113.7 billion by end-2010. Also, if the same proportion of new borrowing by the central government and Pdvsa during 2009 is maintained in 2010, it can be inferred that Pdvsa’s debt could climb from $26 billion at end-2009 to about $35 billion at end-2010.
Moreover, these debt estimates apparently do not include some major additional liabilities, including:
*The $8 billion debt the Chavez regime owes China for Beijing’s “contribution” (i.e. loan) to the joint infrastructure fund created in 2007, initially for $6 billion but doubled to $12 billion in September 2008. Pdvsa is repaying this loan with fuel oil and Merey 16 crude exports.
*The over $20 billion in compensation which ExxonMobil and ConocoPhillips reportedly are seeking as compensation for Orinoco upgrader assets the Chavez regime expropriated in May 2007.
*Between $4.5 billion and $8 billion in unpaid Pdvsa debts to oil services companies and contractors, much of it dating since over one year ago.
*At least $12 billion in compensation for oil services assets the regime nationalized in May of this year. Pdvsa has not started the assets valuation process yet, but $12 billion is the estimate given by private sources.
*Over $2 billion in pension payments to Pdvsa retirees.
*Last but not least, a further $8.5 billion to $10 billion for the new and still unsigned collective contract with the Unitary Oil workers Federation (FUTPV). The old contract cost about $4.5 billion and covered 45,000 workers, but FUTPV President Wills Rangel (a chavista) says the new contract will cover all 90,000 of Pdvsa’s employees and workers.
These additional liabilities total a further $60 billion of red ink for Pdvsa, which implies that Pdvsa’s total debts and outstanding liabilities could hit $95 billion by end-2010.
A train wreck is happening at Pdvsa.
BCV Law Reforms: A Bailout for Bolibourgeois Bankers
The National Assembly tossed a desperately needed life raft to the floundering financial fortunes of corrupt Bolivarian “bankers” like Ricardo Fernandez Barrueco, Arne Chacon Escamilla, and Pedro Torres Ciliberto, among others.
The assembly also guaranteed the rising fortunes of favored financial “intermediaries” like Baldo Sanso, the brother-in-law of Energy Minister and Pdvsa President Rafael Ramirez.
And, of course, the Assembly also bailed out every Fourth Republic “banquero” who joined arms with the regime over the past decade, like the Gils and Salvatierras, among others.
How so?
The still unsigned reform of the Central Bank Law approved unconstitutionally in recent days erased the legal prohibitions which ensured the Central Bank’s autonomy and independence, which comes as no surprise.
The regime has worked tirelessly for years to reduce the Central Bank’s autonomy and independence. The reforms approved by the assembly are, de facto, de coup de grace.
Until about a week ago, the Central Bank was prohibited from financing the government. It could not buy sovereign bonds. It could not accept sovereign or other state-issued bonds as collateral for Central Bank loans to financial institutions.
All those vitally needed prohibitions meant to guarantee the Central Bank’s autonomy and independence from any political or government interference were erased.
As a result, broken banks like Banpro, Bolivar Banco, Banco Confederado and Banco Canarias – all owned by Fernandez Barrueco – now have the opportunity to transfer their losses to the Central Bank by trading in sovereign and Pdvsa bonds.
Just in time, since the four banks reportedly are in the process of being merged into a single financial group.
And so can every other busted bank in the country. Which banks are we talking about?
All of them are listed on the document Pdvsa issued identifying the commercial banks, investment banks and other financial entities approved by Pdvsa to buy the Pdvsa 2014, 2015 and 2016 combo bonds – over $3.2 billion worth – this week.
There may be some good financial entities on that list, but in the main…. readers will sense the drift.
A Black Swan Called Guri?
“A Black Swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The success of Google was a black swan; so was 9/11.”
The Black Swan – The Impact of the Highly Improbable – By Nassim Nicholas Taleb, Dean’s Professor in the Sciences of Uncertainty, University of Massachussetts at Amherst.
At 1:20 a.m. on 17 August 2009, a fire broke out at the Bratsk hydropower plant/dam complex (officially named “50 years of Great October”), which is located at the second level of the Angara River hydroelectric power plants cascade in the east-central Russian province of Irkutsk Oblast.
The Bratsk hydropower plant immediately shut down, and other power generation plants in the Russian power grid were ordered to increase their power generation, including the Sayano-Shushenskaya hydropower plant in southern Siberia several hundred kilometers away from Bratsk.
On 17 August 2009, the Sayano-Shushenskaya hydropower plant was the largest in Russia and the sixth-largest in the world.
However, at approximately 8:13 a.m. that morning, turbine unit No. 2 at the Sayano-Shushenskaya hydropower plant, one of 10 Russian-made 640 MW turbines weighing almost 2,000 tons each, was blown loose from its seating and flew in pieces over 40 meters into the air.
The control rooms and turbine hall flooded immediately. But two other turbine generating units continued to run under water for over a minute, causing massive short circuits and explosions which left the hydropower plant without power, increasing the scale of the catastrophe and killing 76 workers inside the control rooms and turbine hall.
The surging water and electrical explosions caused massive structural damage that will take at least four years to repair at a cost of billions of dollars.
An investigation headed by Rostekhnadzor director Nikolai Kutin concluded that turbine unit No.2 was overstressed and structurally damaged as a result of years of poor maintenance and technical deficiencies.
More detailed information is available here, here, and here.
Photographs and videos of the catastrophic failure can be viewed here, and here.
How does this relate to Venezuela? Why should a catastrophic failure at a Russian hydropower plant in Siberia matter to Venezuelans concerned about the fate of their nation?
It matters because officials at the Guri hydropower plant/dam operated by Corpoelec subsidiary Edelca report that turbine unit No.2 – which is currently shut down for maintenance – vibrates abnormally when in operation.
The Edelca officials also report that the concrete spillway that funnels water into turbine unit No. 2 has suffered structural damage (“perforations”) about 93 meters above the turbine unit, which make it increasingly difficult to control the volume/flow of water running through the power generation turbine.
However, turbine unit No.2 is only one of seven turbine units currently out of service at Guri, which has 20 turbine units with a combined power generation capacity of 10,000 MW. The other turbine units offline at present include Nos. 5, 6, 8, 10, 12 and 16.
Regional newspaper Correo del Caroni reports that turbine unit No.8 is almost ready to be restarted.
But Edelca officials at Guri complain that Corpoelec’s insistence that the repairs be accelerated is creating a dangerously unsafe situation in the turbine hall.
One attempt to restart turbine unit No. 8 earlier in October had to be suspended when the turbine’s rotation speed red-lined.
Turbine unit No. 16 has unspecified operational/technical problems which Edelca officials decline to disclose, even off the record. But a union official at Guri tells Caracas Gringo that turbine unit No. 16 is also, like turbine unit No. 2, a prime candidate for a catastrophic failure.
The other inoperative turbine units – Nos. 5, 6, 10 and 12 – are in the process of being maintained/repaired and soon will be restarted, according to Edelca and Corpoelec managers.
But union officials at Guri warn that these inoperative units also have unspecified problems which technicians are having problems repairing.
Complicating matters further, an explosion and fire on 20 October 2009 at Planta Centro, the thermal power generation plant with a capacity of 2,000 MW near Puerto Cabello, completely destroyed one of the plant’s five 400 MW generation units.
Cadafe officials who manage Planta Centro confirm that three other Planta centro power generation units with a combined capacity of 1,200 MW are unsalvageable. One of these units – No. 5 – is being cannibalized for parts and components in a desperate attempt to restart the other units.
And the only power generation unit still operating at Planta Centro is incapable of generating even 130 MW, which means it is operating about 70% under its rated generation capacity
Investigators with the Interior and Justice Ministry’s political police (Disip) have been sent to Planta Centro to determine if saboteurs caused the explosion and fire. But Cadafe managers and union leaders at Planta Centro say the explosion/fire last week was the result of 10 years of almost zero maintenance.
Venezuela has an installed power generation capacity of 23,000 MW, according to Corpoelec and the Energy Ministry. About 71% of this power generation capacity is hydro, and the rest is thermal (fuel oil mainly, and decreasingly gas).
But Venezuela’s current real operational power generation capacity is between 16,000 MW and 17,000 MW.
The three hydropower generation plants/dams on the Lower Caroni River – Guri, Caruachi and Macagua – currently generate 71% of the country’s power, or roughly 11,000 MW of the 16,000 MW to 17,000 MW of effective operational generation capacity nationally.
Overall, about 7,000 MW of power generation capacity is inoperative, of which about 2,100 MW is hydropower generation capacity and the rest is thermal power generation capacity.
Corpoelec officials confirm that at least 57% of the country’s installed power generation capacity is currently inoperative.
Will there be a catastrophic failure at Guri? Impossible to answer, but we certainly hope not.
Why?
If Guri were to suffer a catastrophic failure in its turbine hall, Venezuela would be hurled literally back into the dark ages – perhaps for several years.
Power outages would not be the current average of 6-12 hours per day everywhere in Venezuela except Caracas. Instead, if Guri fails power outages would be national in scale, including Caracas, and easily could last days or even weeks.
Pdvsa’s crude production, refining and export operations would be affected. It’s conceivable that most of the country’s oil production would be shut down, depriving Venezuela of the foreign exchange earnings without which the Chavez regime, and the country, cannot survive.
The petrochemicals sector likely would be forced to shut down, and so would the basic steel/aluminum industries located in Ciudad Guayana. Gasoline shortages would surge nationally because Pdvsa’s refinery operations would decline and service stations would have no power to operate their pumps.
Private manufacturers also would be forced to shut down, and most commercial activities would be sharply reduced.
Agricultural production probably would collapse too.
The financial sector would come to a standstill. ATM’s would not work, and banks would be unable to process any transactions electronically, including credit card and debit card operations, and the “conformacion” of checks.
Ports, airports, and urban transportation would be forced to significantly scale back operations or even shut down. Imagine the vehicle congestion in Caracas and other cities if traffic lights stop working. Imagine the congestion in Caracas if the Metro has to suspend operations.
The “barrios” where up to 80% of the country’s inhabitants live would be hellishly, lethally darker at night. Imagine how violent crime could explode completely out of control.
As economic activity collapses, unemployment would climb into the clouds, shortages of food, gasoline and everything else would quickly escalate, possibly pushing inflation into very high double or even triple digits.
Higher unemployment, more violent crime, hunger, popular rage would escalate.
And, perhaps sooner than President Chavez and his criminal associates suspect, millions of poor Venezuelans might start eyeing light posts as a convenient place to hang chavistas upside down – like the Italian communist partisans who executed fascist leader Benito Mussolini on 28 April 1945 in the small village of Giulino de Mezzegra, and then hung his corpse upside down at an Esso (Exxon’s ancestor) service station.
