Watching President Hugo Chavez “manage” Venezuela’s electricity supply crisis reminds Caracas Gringo of King Arthur’s battle with the Black Knight in Monty’s Python’s Holy Grail. Denial, denial, denial until, finally, a Black Knight left without arms, legs and severed at the waist says, “All right, then; let’s call it a draw.” We’re reminded of that fight scene because the Black Knight’s motto is “None Shall Pass.” But when it’s over, the Black Knight has been reduced to a loud mouth on a bleeding stump.
Monty Python’s Holy Grail is a great British comedic satire of the legend of King Arthur, Camelot and the quest for the Holy Grail. The only thing legendary about Chavez is the ruin he has brought down on all Venezuelans in just one decade. Otherwise, Chavez is just the political equivalent of a lethal pestilent disease like, say, the Black Death in Middle Age Europe. But there is a certain grim humor to the antics of Chavez and his senior ministers. For example:
*Chavez says that God is a Bolivarian, which means that heavy rains will sweep Venezuela and the power crisis will be over as the country’s reservoirs refill quickly.
*Chavez says there isn’t any power crisis, but if there is one it isn’t his fault. The responsible parties are wasteful Venezuelan consumers infected with the evil virus of capitalism, the old Fourth Republic “squalid ones” who did not invest in the power sector for over three decades, and a drought brought to Venezuela by El Nino and the global warming caused by the Evil Gringo Empire.
*Electric Energy Minister Ali Rodriguez Araque says the power crisis will be over by end-May, because the regime is spending $4 billion in 2010 to commission 4,000 MW of new power generation capacity. This $4 billion expenditure is part of a larger regime plan to spend $14 billion through end-2015 to commission 14,000 MW of new thermal power generation capacity. These are nice round numbers, but otherwise meaningless.
*Vice President and Agriculture & Lands Minister Elias Jaua announces that a “ring” of thermal power generators will be built around Caracas to keep the lights lit in Venezuela’s capital city of over 6.5 million residents. Some units are being installed at Electricidad de Caracas’ Tacoa Plant, and other units apparently will be small 5 MW diesel-burning power generators.
*Electricidad de Caracas President Javier Alvarado says there isn’t a power rationing program. But a regime resolution warns that clients who don’t cut consumption by 20% in less than a month will pay 200% more for their electricity and could lose their power supply completely. Meanwhile, the Centro de Gestion Nacional (CGN, formerly Opsis) reports that in the roughly the first three weeks of the government’s “power rationing” program to reduce consumption by 20%, the actual “savings” were less than 5%. The CGN report also says that key thermal power generation units have been shut down and the start-up of other units is delayed.
*But Corpoelec is rushing to install 1,000 MW of thermal power generation capacity based on small diesel-burning units that generate at best 4.5-5 MW per unit. Pdvsa also is rushing to become self-sufficient in power generation, spending $1.2 billion to import 900 MW of thermal power generation capacity from the US, Europe and China. Of course, the fuel oil and diesel needed to run all this new generation capacity will be subtracted from Pdvsa’s exports of fuel oil and diesel. Caribbean clients of Pdvsa will get less fuel oil and diesel in coming months, says Ramirez.
It’s classic Bolivarian entertainment at its best, a dog-and-pony show where Ringmeister Chavez and all of his subordinates are constantly in movement, or at least projecting the appearance of movement, purpose, direction, effectiveness, control, professional management. But it just isn’t so.
Venezuela’s power crisis didn’t just happen. It was 11-plus years in the making. It won’t be solved quickly. The Caroni River Basic (95,000 km2) is suffering the worst drought in many years. Other Venezuelan river basins and water reservoirs associated with those systems are also at their lowest levels in this blogger’s memory. Chavez says there’s plenty of time. Guri has at least five months left before the situation gets alarming, not critical, only alarming, says Chavez.
But independent voices within Edelca warn that the Guri Dam’s water levels have dropped into what they call “the emergency zone,” a point where the wisest course of action is to start shutting down some power generation capacity to conserve the turbines and slow the rate at which the reservoir’s water level is falling. However, Corpoelec’s orders are that Guri should continue operating flat-out. Only 63% of its 10,000 MW rated generation capacity is operational, but Guri reportedly is operating this reduced generation capacity above the maximum recommended levels for safe turbine operation.
Edelca’s says the “emergency zone” is when the water level is between 256/9 meters and 248 meters above sea level. The last CGN report put’s Guri’s water level at 254.07 meters, but that was over a week ago and new (still-unconfirmed) reports suggest the Guri reservoir’s rate of descent has accelerated from about 10-12 cm a day to about 16-18 cm a day. If these reports are accurate, the “national collapse” predicted by Edelca in December 2009 could arrive sooner than between end-April to end-May.
The CGN’s latest report says that Edelca’s Lower caroni complex is generating 216.78 GWh per day, of which Guri accounts for 122 GWh. Guri should nto be generating over 107 GWh, say some critics. But Corpoelec has to continue squeezing all the power it can generate from Guri and the other Loer caroni River units because the country doesn’t have thermal generation capacity to offset any reductions in hydro-power generation.
This is the nub of Venezuela’s power supply crisis. There isn’t enough thermal power generation capacity to offset any reductions at all in hydro-power generation. It’s a structural crisis that only can be solved by (1) repairing the existing power generation and transmission grid, and (2) building new power generation plants and transmission systems. It doesn’t matter what Chavez says. The “national collapse” that Edelca forecast due to the power supply crisis is unavoidable, inevitable, and imminent.
Venezuela’s economy will be forced to tighten its belt at every level. Four-day work weeks, reducing production and assembly operations by at least 50%, switching off every possible electrical device including air conditioners – all this and more will be seen everywhere in the country. Think of the electricity system as an immense tree with millions of branches, stems and leaves. Each branch, stem, and leaf is a user of electricity. Electricity is the “water” of the economy and society. However, put the tree in the equivalent of the Sahel Desert or Chile’s Atacama Desert where there is zero moisture, and the first to die are the leaves, stems and branches. Keeping the tree analogy in mind, cut off power supplies to Venezuela’s economic and social sectors and they will wither and die quickly, like the tree’s leaves, stems and branches if deprived completely of water.
We’re not suggesting that all of Venezuela could black out. The Chavez regime will do everything in its power to keep the lights lit in Caracas. The regime is definitely scared of the possible popular consequences of prolonged blackouts in Caracas. But the rest of Venezuela outside the greater Caracas metro area likely would be abandoned by the regime as power supplies are channeled to Caracas and to essential oil industry operations. Some analysts have suggested that at least 40% of Venezuela’s population faces days and even weeks without electricity if Edelca is forced to shut down 5,000 MW of generation capacity at Guri.
And it’s not just Guri. Edelca also operates two dams and hydro-power complexes downriver from the Guri Dam – Macagua and Caruachi. If Guri has to reduce water volumes and shut down generation capacity, there would be a cascade effect downriver as Macagua and Caruachi also would have to reduce their power generation levels. First Guri will shut down half its generation capacity, but the cascade effect of falling water levels then will reach Tocoma (not commissioned yet), and then will continue further downriver to Caruachi and, finally, Macagua.
Edelca’s Lower Caroni River hydro-power complex has a total nominal generation capacity of 16,136 MW, but currently is producing only 7,000 MW, says Miguel Lara, a former Opsis director and acerbic critic of the Chavez’s regime’s policies in the electric sector. Lara puts Guri’s nominal capcity at 7,850 MW, Caruachi at 2,196 MW and Macagua at 2,930 MW. But an Edelca source says that if Guri is forced to shut down turbines with a nominal generation capacity of 5,000 MW, its total power output will drop to about 3,000 MW, and immediately Caruachi and Macagua will be forced to reduce their power generation by at least 20%, or almost 1,000 MW.
Cascade is a good descriptive word to describe the immediate national impact of taking 5,000 MW to 6,000 MW of hydro-power generation capacity offline on the Lower Caroni River. Every economic activity in the country would be affected. State-owned potable water aqueducts and wastewater disposal/treatment systems would not work properly. No electricity means that there also would be no refrigeration to conserve frozen and refrigerated perishable products including food and many medicines.
Health care services, especially state-owned health services, would collapse. Service stations cannot pump gasoline and diesel without electricity. Banks cannot operate efficiently and securely without their integrated online/computer systems. Public transport systems (traffic lights, etc.) would shut down, worsening vehicle congestion. The hills around Caracas would no longer glitter with millions of points of lights at night, but instead would be black. Telecommunications services including cell phones would go dark as well. Commercial and passenger activities at land borders, seaports and airports would be disrupted. Radio communications would black out too if there isn’t electricity to recharge radio batteries. Fedecamaras economists estimate each day the private sector does not work costs over BsF2.5 billion in lost production and sales, almost $1 billion a day at the official exchange rate, or $52 billion a year if a four-day work week is in effect for 12 months.
But the large mainstream economists are still playing it conservative. The Chavez regime says the economy will grow 0.5% in 2010. Independent forecasts concur roughly on a contraction of about 3%. But a handful of forecasters in Caracas think the economy could shrink at least 8% in 2010 due to the power crisis. And it won’t be over in 2011, either. The power crisis will hurt Venezuela’s economic growth prospects for at least three to five years.
How will Venezuela’s populace react when the lights go out? Parts of the country already are without electricity for up to 14 hours a day, and in these areas daily protests are occurring although they are not reported by a mainstream news media obsessed with self-censorship to avoid being persecuted or shut down by the regime. But 14-hours without electricity every day soon could be the norm everywhere in Venezuela, including Caracas. It’s possible that a new national season of nightly “cacerolazos” will start soon. More frequent and larger street protests are likely too. Chavez and his propagandists will try very hard to distract the public’s attention, but nothing the regime does will whitewash the long hours that everyone will spend in darkness every day.