President Hugo Chavez declared in Cochabamba on 17 October that Repsol YPF’s huge gas find in the Gulf of Venezuela’s Cardon IV Block – between 8 trillion and 10 trillion cubic feet – soon will “illuminate all of Venezuela.”
But Repsol’s CEO Antonio Brufau says it will take at least five years to develop the offshore gas field commercially.
The Bolivarian regime won’t illuminate anything with Cardon IV’s gas sooner than the start of 2015.
Meanwhile, dozens of power outages are reported daily in Venezuela. These outages generally last between two hours to six hours per day, on average, everywhere in Venezuela except Caracas.
Caracas has been spared for two reasons: election politics** and the fact that for over a century, La Electricidad de Caracas was a private power utility with excellent managers/workers and very well-maintained generation and transmission assets.
Venezuela’s power crisis – daily consumption is, on average, 1.5 GW higher than real operational generation capacity – is entirely a creation of the Chavez regime.
It is a crisis which cannot be “fixed” quickly. The Chavez regime can end the crisis within five years if it spends at least $20 billion and actually completes all critically needed generation and transmission projects on schedule – which is something it has been incapable of doing since 1999.
Even worse for Chavez, Venezuela’s power crisis will certainly trigger volatile social and political situations throughout the country over the coming months.
Because of the power crisis, which has been growing worse since 2005, millions of mostly poor Venezuelans have been increasingly enraged with the Chavez regime for almost four years now.
There have been literally thousands of protests in hundreds of communities throughout Venezuela during the past four years.
And there have been many cases where protesters invaded and trashed the local offices of state-owned power utilities, trucks owned by the utilities were burned, streets were blockaded with burning tires and debris, and power company workers have been physically abused, etc.
The daily outages have damaged or destroyed household appliances and other electronic products like computers and TV sets in tens of thousands of homes, according to reports by regional news media in cities like Maracaibo, Valencia, Maracay, Barcelona-Puerto La Cruz, Ciudad Bolivar and Ciudad Guayana, among others.
Businesses also have suffered huge losses as a result of the losses, including damaged equipment and machinery which in most cases is very costly to repair and requires imported components.
But President Chavez insists it’s not the fault of his Revolution. The ones responsible for the national power crisis are the “wasteful” Venezuelan people. This past weekend Chavez took time out from his busy schedule as self-proclaimed Paladin of the 21st Century socialism in Cochabamba to chastise and scold the Venezuelan people for their wasteful, irresponsible consumption habits.
The Chavez regime can – and does – lie congenitally and systematically about the real situation inside Pdvsa and other state-owned enterprises. It can fudge and falsify data at the National Statistics Institute (ENI). It can spread falsehoods and propaganda about everything in Venezuela.
But the Chavez regime cannot hide national power outages.
So far, there have been seven national outages since President Chavez nationalized the power industry in first quarter 2007. There will be many more national outages over the coming couple of years.
Popular rage certainly will increase nationally.
The problem is simple to explain, but impossible to fix rapidly.
Venezuela’s national power system (SEN) has installed power generation capacity of about 23,000 MW. But the SEN currently is capable of generating only 15,770 MW to 17,337 MW.
At any given moment, between 6,000 MW and 7,000 MW of Venezuela’s installed power generation capacity is offline because generation units at many thermal power plants (Planta Centro, Josefa Camejo, etc.) are shut down.
Many of the new power generation plants commissioned in the past two years by the Chavez regime also are operating at substantially less than their rated generation capacity.
In some cases, it’s because the transmission infrastructure linking the plants to the national grid cannot handle increased power loads coming from the new generation plants. But Fetraelec power union officials tell Caracas Gringo that Corpoelec doesn’t spend on maintenance, even at the new plants.
The Chavez regime has no ready solutions for the power crisis.
Besides scolding the “pueblo” for being “wasteful,” President Chavez has ordered Corpoelec to implement a daily power rationing plan nationally between the hours of 2 p.m. and 8 p.m. – everywhere except Caracas, of course.
Officially, the power rationing program is supposed to last only until first quarter 2010.
In reality, Corpoelec will continue to ration power indefinitely – at least until the Chavez regime makes 100% of the minimal capital expenditures ($20 billion) in new generation and transmission capacity needed urgently by the country.
Also, hopefully, 100% of these projects would be built and commissioned by the start of 2015 if the effort begins no later than 31 December 2009.
Of course, this won’t happen.
Since the start of the Chavez regime in 1999, less than 25% of state-owned power generation and transmission infrastructure projects have been completed and commissioned in any given year.
Venezuela’s power crisis likely will get much worse over the coming 24 months. Theoretically, higher oil prices in 2010 and 2011 should spur more robust GDP growth. But the SEN’s structural incapacity to generate more power could be a strong brake on Venezuela’s economic recovery.
As the lights go out daily across Venezuela, and the duration of the outages lengthens, next year’s scheduled National Assembly elections could become a competitive event.
Some in the political opposition certainly hope the power crisis can be leveraged into a winning issue, more so even than the security issue. After all, violent crime will spiral out of control quickly if the lights go out in the “barrios.”
But Chavez has a history of winning when all indicators showed him losing, and the political opposition has a history of shooting itself in the foot time and again.
Meanwhile, small portable generators for individual family use could be a sensible investment – but just in case diesel supplies fail because the refineries shut down due to the power outages, it might be a good idea also to stock up heavily on candles.
Or better yet, download and print instructions on how to make candles.
** Venezuela is scheduled to hold National Assembly elections in November 2010. Every opinion poll shows that if elections were held today, the Chavez regime likely would lose dozens of seats. But this assumes the political opposition parties get their acts together, which they have never been able to achieve consistently over almost 11 years of Chavez rule.