Caracas got hit each time for a few minutes to a several hours. But power outages rarely last for a very long time in Caracas, thanks historically to good old dependable Electricidad de Caracas.
Most residents of Caracas take the stability of their electricity for granted. However, is this complacency justified? Or, in truth, are we Caracas residents fooling ourselves about the apparent stability of our electricity supplies?
The last national outage involved almost simultaneous failures at the Planta Centro and Tacoa thermal power plants. Moreover, the Bolivarian power technicians at the “New Electricidad de Caracas” (NEDC) had problems restarting Tacoa, the 1,200MW thermal power generation plant on the coast of Vargas state below Caracas.
Caracas currently consumes 2,300MW, but NEDC only generates 1,800MW and must import 500MW from Guri.
But Jose Manuel Aller, a professor at Simon Bolivar University in Caracas, says that NEDC’s 1,200MW Tacoa thermal power plant “has problems.”
Tacoa is generating 1,200MW, but “under very bad conditions…they’re burning too much fuel oil and that is damaging the burners on the boilers,” Aller says. What does NEDC say? No comment.
But Venezuela currently has a power supply deficit of at least 1,500MW, with Tacoa generating at full capacity. If Tacoa goes offline abruptly and cannot be restarted quickly, the national power supply deficit would almost double to 2,700MW.
Corpoelec has no spare generation capacity whatsoever to redirect to Caracas if Tacoa goes down, unless it withholds power supplies now shipped from Guri to other areas of Venezuela.
Worse yet, if Tacoa is forced offline for any length of time it could trigger larger national outages because Guri has no spare hydro-power capacity to redirect towards Caracas on a decrepit national transmission grid.
Boosting the already overloaded transmission system’s power load further would cut off power supplies to the basic Guayana industries, and likely also trigger multiple equipment breakdowns at various sub-stations and other points on the transmission grid.
Caracas could remain blacked out for many hours, possibly even for days if major repairs are needed.
Without power, absolutely everything in Caracas without alternative power generation assets, say, like the shopping malls, would shut down.
A prolonged power outage lasting several days in the greater Caracas metropolitan area, home to over 6 million human beings, likely would trigger a social crisis of an intensity not seen in Venezuela since the “caracazo” of 1989.
Imagine the opportunities for targeted political mayhem by a corrupt regime intent on increasing its power and control over everything – a lo Castrista.
But EDC president Javier Alvarado says Caracas residents have nothing to worry about. By 2011 the company will no longer need any power supplies from Guri.
Alvarado says NEDC will invest over $1 billion through end-2011 to increase its power generation capacity by 1,600MW, to 3,900MW, guaranteeing the capital region’s power supplies for years to come.
Alvarado is referring to Termocentro, the 1,620MW thermal power generation plant in the Tuy Valleys which old foreign owner AES planned to build at one point. But Termocentro is over three years behind the original timetable in place just before Chavez nationalized the old, dependable EDC.
In May 2009, Termocentro was awarded as a turnkey project by NEDC, with the requisite approval of Public Works and Housing Minister Diosdado Cabello, to Spain’s Duro Felguera group at an announced cost of over $2 billion, double the number given by Alvarado.
NEDC is already piling up very substantial losses just two years after it was nationalized by Chavez, so where does Alvarado expect to raise $1 billion in cash for capital expenditures?
NEDC is drafting a “fair and representative” rate hike proposal directed at high consumption residential and commercial power users. Soak the rich to subsidize the poor. Chavez loves this populist silliness, though it’s always ineffectual in practice.
But what if Alvarado’s assurances are overstated?
President Chavez has stubbornly refused to countenance any power rate increases since 2003. With Venezuela’s GDP down 4.5% in the third quarter, with inflation rising toward 30%, and Chavez’s approval rating falling below 50% a year before National Assembly elections, NEDC may not get the rate hikes it needs to raise at least part of the $1 billion cited by Alvarado.
All current indications point to the country’s power crisis growing worse over the coming year. Corpoelec officials privately admit that power rationing will continue during all of 2010.
President Chavez created a new Electric Energy Ministry, and appointed a politician who can’t describe the electrical architecture inside a light bulb as the new minister in charge of ending the power crisis.
The president also earmarked less than $200 million of emergency investments before end-2009 to restart a heap of rusting, obsolescent piles of junk which collectively will add over 1,400MW of generation capacity to the national power grid.
And Chavez ordered a bunch of power conservation measures to reduce consumption immediately by 20% or more. Again, good populist nonsense, but the actual results in terms of less power consumption will be meager at best.
Power industry experts say the country needs over $20 billion of investment, at today’s prices, to install over 8,000MW of new power generation capacity over the coming five years.
Additional billions of dollars must be spent to restart over 7,000MW of thermal and hydropower generation capacity currently offline. At least 2,000MW of this offline capacity – Planta Centro – is unsalvageable.
As a result, the $20 billion investment figure cited by Venezuelan power experts could be a low-ball estimate, perhaps by as much as $5 billion to $10 billion. But Corpoelec and its subsidiaries – including NEDC – are all in deep red financially.
Moreover, the state-owned power sector’s combined debts total over $6 billion, according to Fetraelec national power union economists. At least $4 billion of this is owed to Edelca by Cadafe and other government entities. Cadafe is owed $2 billion by its public sector clients.
But even assuming that the Chavez regime comes up with the capital the state-owned power sector needs ($20 billion over the next five years or $4 billion a year at minimum), since 2000 state-owned utilities (mainly Cadafe) have never completed much over 25% of their programmed capital expenditures in generation, transmission and distribution assets. This dismal record won’t improve under the new Electric Energy Ministry. In fact, even worse should be anticipated.