Only 12 days into 2010, the bad revolutionary news just keeps piling up.
It’s shaping up as a potentially great year for those who would welcome a Black Swan that triggers the departure from power of President Hugo Chavez before the next scheduled elections at the end 2012.
Let’s be clear before going further: There’s absolutely no doubt that Chavez leads a criminal regime that associates openly with rogue states, narco-terrorist groups, and transnational organized crime. But forget a democratic “change” in the 2010 legislative elections and the 2012 presidential elections. Chavez & gang control the electoral authority, judiciary and legislature. If the regime loses an election fairly, it will jigger the official results to its advantage. Chavez and his criminal/terrorist associates will never give up power without a real fight. However, the real threats to the survival of Chavez are internal – deep/high within his regime – rather than with a “political opposition” which is rejected/despised by as many/more Venezuelans who also repudiate the chief thug in Miraflores.
It’s a given that 2010 will be a much worse year in many respects than 2009.
This year, Venezuelans can look forward to a stagnant economy, daily power outages, higher inflation, more unemployment, spreading political conflict, increased social tensions, and a continuing rise in criminal violence.
First, a compulsory national power consumption program went into effect on 1 January 2010. The regime threatened to cut off power supplies and charge higher rates to any household, commerce or industry which exceeds its consumption quota. The “plan” was laughable, impractical, clearly drafted by ignorant/incompetent hacks. Nothing was said about critically needed generation/transmission infrastructure investments. There was no explanation of how Venezuela reached this advanced state of collapse given the billions of dollars of power projects that Chavez has been announcing over and over since 2006. Instead, Chavez blamed the compulsory consumption cuts on El Nino, global warming and capitalism.
Second, the STRONG (LoL) Bolivar (BsF) was devalued on 8 January to raise cash for the regime’s political/electoral agenda this year. The “old”Cadivi two-tier system – dollars at BsF 2.15 and the “permuta” or swap market funded by Pdvsa – created the worst corruption in Venezuela’s history. So the regime created a “new” THREE-tier exchange system with an “oil dollar” at BsF 4.30, everything else at BsF 2.60, and the “permuta” market. But the devaluation was not announced in tandem with fiscal and macroeconomic adjustment measures. Chavez & gang only want more BsF to continue increasing public spending ahead of the legislative elections next September and perpetuate the myth that Venezuela’s economy is robust and solvent. Inflation could average 50-60% this year compared with just over 25% in 2009, says former Central Bank chief Domingo Maza Zavala. However, to ensure consumers that aren’t gouged by unscrupulous merchants, the regime has deployed uniformed “reservists” and red-shirted PSUV thug “patrols” to police store shelves and intimidate the people who own/work in those stores.
And today, 12 January, the government announced a national program of rolling power outages of four hours per outage every second day. This new program is a complement to the compulsory consumption cuts plan that went into effect on 1 January. The entire country is under this compulsory power outage program. Even Caracas won’t be spared. To ease the crunch on people and economic activity, the rolling outages will be applied in cities and regions by sector according to plans drafted by Corpoelec’s operating subsidiaries.
Four hours without power every two days – for starters. Power Minister Angel Rodriguez says that rolling outages are needed immediately so that Venezuela “does not reach a point of no return” – an interesting turn of phrase that hints at desperation within the regime. The rolling outages supposedly will last only to the end of February. But that deadline assumes that it starts raining. The Chavez regime says it is bombing clouds over Guri and the Caroni River to speed the end of the drought. However, if the rains don’t arrive, the rolling outages will have to be extended, and very likely their frequency/duration will increase from four hours every two days to, perhaps, four hours every day, and then five, six, seven, eight hours in two tranches per day. But who wants to be a pessimist?
Caracas Gringo thinks that the situation, with respect to collapsed critical infrastructure, is much worse than the regime is willing to acknowledge. Oil, power, gas, basic industries (steel, aluminum), agriculture entities owned/operated by the Bolivarian state are essentially road kill.
Evidence of Pdvsa’s collapse is abundant: Crude output down to about 2.1 million b/d at end-2009 from over 3.5 million b/d at end-1998. Over 12,000 wells shut down. Less than 70 oil drilling rigs active. Decade-old refinery upgrade/expansion plans have barely advanced. New refinery development plans remain stalled. Dozens of refinery explosions and fires since 2003, with 12-17 deaths and several dozen more injured. The $800,000 briefcase seized in Argentina, part of a reported $5 million cash payoff to the Kirchners. The corruption and nepotism at the top of Pdvsa, presided by Energy Minister Rafael Ramirez, his spouse, mother-in-law, brother-in-law and other relatives.
If Pdvsa is collapsed, there’s no hope for the power sector which depends on Pdvsa for its funding needs. The national rolling outage program implemented on 12 January without any prior announcements to prepare the populace suggests that Venezuela’s power crisis could be much worse than the regime is willing to acknowledge. For example, Chavez won’t admit that Planta Centro, Cadafe’s almost 30-years-old 2,000 MW thermal power generation plant near Puerto Cabello, is unsalvageable and ought to be torn down and replaced with a new thermal power plant. Chavez also won’t admit that the 10,000 MW Guri Dam’s problems are more critical than simply dropping water levels. Edelca officials say that about 2,500 MW of Guri’s capacity is offline, meaning Guri is generating at 75% of capacity. The national power transmission system – particularly the 800 Kv lines from Guri to central/western Venezuela – can’t handle larger the power loads that will be generated starting in 2013 or 2014 or 2015 by the regime’s new thermal plants that were supposed to be ready in 2006-2007.
Four hours of zero power every two days is just the beginning. Even if the rains come, power rationing will continue. Simple math: Corpoelec has over 23,000 MW of installed power generation capacity but barely generates 16,200 MW at present. Venezuela’s power consumption tops 17,500 MW. The experts say that catching up would take five years and cost over $20 billion at a minimum – and this assumes a modicum of managerial competence and technical capacity which the Chavez regime very demonstrably lacks. The rolling power outages likely will continue for months, and will disrupt economic and home activities. More Venezuelans will be unhappier as the year passes. It’s going to be a rock ‘n’ rolling year.