Venezuela’s Electricity and Water supply: Not a pretty picture

November 1, 2009

guri3

I have been trying to write about the country’s electricity and water problems for a while, but have not done it because the whole things has so many edges that to describe all of the problems would take a post so long that you would all be bored to death. But in some sense, the problems that have surfaced now, have been around for years and the fact that they have exploded now is simply coincidental. I have not been able to pin down exactly why everything happened all at once. Chavez blames the water problems for El Niño, but while there is evidence that the phenomenon has started, it can not be blamed for what is happening.

Problems with Venezuela’s water and electricity’s supplies are not new. When Chavez came to power, the Caldera Government was thinking of privatizing some of the regional electric power companies for the simple reason that the investments required with oil at around US$ 12 per barrel were beyond the capability of the country’s Government.

Chavez clearly disagreed with this even as he was not using the word socialism at the time. And he stopped the nationalizations, while simultaneously freezing rates for water and electric services. This immediately limited the ability of the water and electricity companies to fund new projects and do maintenance. No new major electric power plants have been built in the 11 years of the Chavez era. Instead smaller plants were built, most of which contribute little to the country’s power grid, because they were built without taking into consideration the ability to connect and transmit the power.

Pictures of Planta Centro, a 2,000 MW plant that s now rated at 430 MW and currently producing only 130 MW have been circulating for a couple of years, but is only now that people are paying attention.

And then there is the incredible story of Venezuela buying power plants from Cuba. These are small plants of up to 40 MW, great for Cuba which does not have the modern interconnected power grid, but not as useful  in Venezuela. Cuba does not make these plants, they buy them from Sweden or Spain and reexport them to Venezuela at an outrageous price of about $1,400 per KW, compared to $500 for a large power plant, unless Venezuela is buying that from Spain. Oh, I forgot, the 300 small power plants purchased from Cuba are currently not operating because of problems with the filters with Venezuela’s diesel.

In the middle, when oil prices were high, Chavez rather than invest money in new power plants went out and nationalized all private power generation companies, spending over US$ 2 billion in buying fully functional electric companies, rather than patching up Planta Centro or Guri.

And according to Caracas Gringo, Guri, Venezuela’s largest hydroelectric power plant is a mess, with seven of its twenty turbines out of service. There are also landslides all around the dam, and the engineers are feeling the heat to bring the turbines on line before they are ready.

One of the problems is that Chavez has named, time after time, retired or active military to lead these electric power companies, all of which had no prior experience in the electricity genration or transmission business. To top it all off, Chavez now creates an additional bureaucracy, creating the Ministry for Electric Power on top of Corpoelec (which Chavez created in 2007), the company which was supposed to consolidate all of the country’s electric power, transmission and generation. However, no cost efficiencies ahve been achieved as each of the regional companies still runs independently, with its own Board and independent structure, including bodyguards and perks for the Executives. And the firts Minister for Electric Power has no experience in the area, as he is a former oil worker who is totally loyal to Chavez and his revolution.

The situation is no different in water, where rates have been frozen in another one of Chavez’ perverse subsidies to the rich (The poor mostly do not pay for their water, if they have it).Which is the reason why Venezuelans use more water than they should, besides the fact that there is a very leaky distribution system due to the lack of investment. (There is an article on the water system in El Nacional’s Siete Dias section today, by subscription).

Take Caracas as an example. It is fed by three dams, all below Caracas’s altitude, which thus requires electricity to pump up the water. These three systems were built in 1962, 1968 and 1998, in the terror days of the incompetent IVth Republic, but this Government was too busy spending on studying Giordani’s folly, the Orinoco-Apure axis, to do anything in the last eleven years. Remarkably, 2008 was the year with the lowest rate of investment, a year with the biggest oil windfall in the country’s history.

Unfortunately, this is a problem that affects us all and has no easy solution in time. What Venezuelans face in the next few years is more blackouts and water shortages. We now have water rationing such that the water will last until May, when rains are supposed to begin again. But the calculation is precise: There will be no water if rains come in June or July, which is always a possibility.

Curiously, this is the second time in Chavez Government that water levels have been low. It happened in 2002 and then rains came and the Government forgot the problems.

Many companies now have emergency power plants just in case. Even condo buildings have begun buying them, it is a big business to import and install them. Funny thing is that two years ago, as part of the nationalization of the electric industry, Chavez also nationalized those companies that were offering industrial concerns their own power independence. The same thing that Chavez now is asking even shopping centers to have.  But he probably forgot what he did already.

When I was a kid, water problems were the rule of the day. Electricity was not, because I lived in Caracas and the private Electricidad de Caracas always provided us with power. The water problems went away as the IVth. Republic spent and built what was required.

But now, Electricidad de Caracas has been nationalized and water problems are back. Unfortunately this means that the upcoming years will be bad as our standard of living declines as water and electricity rationing becomes the rule of the day.

It’s called underdevelopment and is all part of the Devils’ Excrement.

13 Responses to “Venezuela’s Electricity and Water supply: Not a pretty picture”

  1. Dr. Archibald Says:

    Hello there,

    So it seems the problems here are mostly to due with underinvestment and unnecessarily decentralized corporate structure.

    It is possible to keep electricity rates low without under investing, Hydro Quebec being a good example of this practice. The low rates help keep smelters in and keep the population less frustrated. All the while the company pays 2 billion dollars in dividends to the government and even over-invests to keep jobs. (http://en.wikipedia.org/wiki/Hydro-Qu%C3%A9bec)

    To rectify the problem in Venezuela, I might suggest first restructuring the nationalized electricity producers and distributors, as well as improving regulatory measures and corporate governance, borrowing perhaps from this: http://videolectures.net/socius_kallevig_ogsoecn/

    Thus it is of my opinion that there is little need for privatization, particularly given electricity distribution’s tendency to natural monopoly, as well as electricity production’s high barriers to entry. Add to that the fact that a nationalized electricity producer can be a powerful tool for economic policy.

    Cheers.

  2. m_astera Says:

    RE sea salt-

    A comment from someone who writes soil mineral prescriptions for a living:

    Peter, I do recommend sea salt in some soil fertility Rx’s, but only if the soil needs sodium. Sea salt also has many essential trace minerals, and NaCl is a strong electrolyte, so it will enhance soil conductivity, which is good IF the soil needs more conductivity. And if the soil is sodium deficient.

    However:

    Much of Venezuela’s agricultural land is already oversaturated with salt, enough that it seriously limits crop production.

    Maximum desirable salt application for most soils is around 400 kilos/hectare, or 40 grams per square meter, well mixed into the top 15cm of soil. Not enough to reflect much sunlight, or attract much water.

    May I suggest that you do a little more research and experimentation before making such wide-ranging recommendations?

  3. peter gokey Says:

    To Whom It May Concern:

    This will fix all of your water problems. By putting unrefined sea salt from the ocean on the ground, you will never have a shortage of water again and your plants will grow better. Nothing will ever dry out again

    Unrefined sea salts from the Atlantic ocean, dried in the sun put upon the ground will reflect the sunlight back to the sun and will put chloride in your ground that’s phenomenal for any plants in our planet. It kills all diseases.

    When the salt conducts the sun during the day, it puts energy inside the salt. When you put water on top of it, or mix it with water, it creates energy. Then during the night time, the moon will pull the salt back to the surface with the water.

    Every morning you will have fresh water, and fresh unrefined sea salts. Your plants will grow better than they ever have, you will never need fertilizer again.

    You will not have problems with freezes any more.

    When the salt is conducting energy from the sun, the sodium in the salt will convert from a +1 to a -1 during the day and at night, it will return to a +1 so the moon will conduct it.

    Please give this to anyone who can use it. I do this for my family, the world.

    Peter Gokey
    208-699-5164
    Pgokey1@gmail.com

  4. Roberto Says:

    How about making the biggest deadbeat customer of all, the government, pay for it’s electricity?

    How about eliminating the spider web of illegal electrical thieves, and making them pay, even if it’s Bs.F 10 / month?

    How about fixing the constant mains breaks in the water distribution system? Some go unrepaired for months at a time

  5. moses Says:

    Miguel:

    There are some simple meaures which could help the water / electricty rationing:

    1 As suggested by a professor from USB (Aller ?) go back tp previous local hour (-4:00 gmt) intead of current (-4:30 GMT), many places in Venezuela ar already darl arounf 5:45 pm so people start switching lights, etc. earlier.

    2 – In Caracas suggest (or eventually enforce) owners of buildings to shut down water pumping systems from 11:00 pm to 5:00 am. You would not believe how many buildings use inefficient water pump + bypass systems were the water pump is essentially on for 24 hours and excess water flow isrecirculated to water tank …

    Like this ther may be simple measures that could help pospone for some time eventual collapse of water / electricity ….


  6. […] reading: Water Rationing Begins in Caracas, Other Major Venezuelan Cities Venezuela’s Electricity and Water supply: Not a pretty picture Chavez busy solving the electricty problem Chávez sugiere que, para ir al baño de noche, se use […]

  7. Roberto Says:

    Water has been a problem, always. At least as far back as I can remember, there always were problems. In fact I remember a Carnaval, must have been like ’73 or ’74 where instead of water balloons, people filled ballons with paint and other unmentionables instead. Rocks too, believe it or not, were used as well.

    Electricity was always a problem outside Caracas. In fact, if you saw a Cadafe sign, you were well advised not to move there.

    What is truly criminal, is that Hugo y su combo have done jack-diddly-squat about these problems. No outgoing administration to blame, no lack of resources, just plain “Chapuceria de primer nivel”

  8. ErneX Says:

    Water problems were always present at least during my 24 years of existence in Venezuela, condos had tanks but eventually everyone started putting an extra tank inside the flat and a pumping system because some years the huge condo tank drained and you had to start using your own.

    The electricity problems, those didn’t existed.

    • Patrick Says:

      Hi ErneX, btw do you know a company somewhere building electronic device for venezuela condo water tank. This is really primitive, and have to be there to open the switch and close the motor at a certian time, or swith off before and tuen on the valve and then no water in house.

      Please contact me directly

  9. Aristo Says:

    Re: “The water problems went away as the IVth. Republic spent and built what was required.”

    Can you elaborate? What was built and when?

  10. firepigette Says:

    Water and electricity are connected when folks live on hills.I lived in Caurimare at the top of the hill and had many water shortages during the 90’s because when the pressure was low I depended on a water pump to extract water for my house

    Also there were injustices in different ways:

    1. some selfish folks in the neighborhood had machines that would draw the water to their house first leaving little or nothing for others

    2 Our electric bills were so high that we could hardly use electricity whereas when we lived in Catia we paid nothing because in Catia everyone stole the electricity( not my doing) which was why middle class people like us had to do without in Caurimare so that thieves could have it for free.

    3. We made the choice to live with these difficulties and the pursuant financial hardships, to provide a safer place for our children

    4 often I would see severe water leakages on streets that took weeks before they were repaired..hardly anyone gave a hoot

    So I ask myself:

    i could go on but why ?, Unless people learn to do their parts, NO government can solve Venezuela’s problems.Much less- with Chavez –

    it will be impossible because his whole pitch is about making people even more dependent and irresponsible than ever!He never allows people to feel responsible…both rich and poor are to blame.

    Individuals who do not realize they make a difference might as well stop voting all together.

  11. Kepler Says:

    I read Gringo’s post and was surprised at the deaths in Russia. I did not find anything about that in the Russian news, though: just like the old times. Thanks God Venezuela does not have nuclear plants. This situation reminds me what was happening in Belarus before that reactor at Tchernobyl blew up.

    I agree with Harry Hugo I just thrives on thrashing the US.
    Now, I disagree Venezuela is or was rich. Venezuelans have been living as petrodollar parasites for almost a century now, but as very inefficient parasites at that, getting the crumbles (they sought it: they preferred the easy way).
    I am a capitalist, but I don’t think capitalism makes people wealthy per se.
    I prefer free trade, but I know it is absolutely rubbish the US, UK, Japan or any other country prospered because they were abiding by free trade. It was one-way free trade, they were and are incredibly protectionistic when it suits them. You just have to read history books from more than one country to find things out.
    The real drama in Venezuela is the utter lack of education by the huge majority of its citizens. Without education, real education, and civil engagement, we are the poorest.

    I reject communism, but I get the rash when hearing love for any -ism as if we were talking about the Holy Grail.

  12. brian terry Says:

    H Chavez doesn’t want to deal with the problems of Venezuela. He does, however, enjoy creating problems for the US. And that is where he likes to spend “his” money. Anything he can do to thwart the good efforts of the US, he’s there. Watch him crisscross the globe like some important world diplomat bellyaching that the US screwed him. The US found oil in his country and has made his country rich. Yet he hates the US! Go figure!

    He has spent so much money on nationalizations, military equipment (that won’t work if it’s ever needed) and stupid deals with incompetent countries. There is little money left for his country’s needs.

    Infrastructure is critical to keep Venezuelans healthy and happy. Water and electricity are a necessity. Sooner or later he’ll realize this and hopefully spend less on nonsense and more on the people who he believes he represents.

    For you commies, H Chavez and comrades will have every bit of water and electricity they need. You want equality, go to Cuba to see equality, or the lack thereof. F Castro bathes himself in money; the people are on food rations. You stick to communism and I’ll continue loving capitalism. Communism brings lies, misery and death, capitalism brings hope, creates wealth and provides plenty of everything for most people. Unlike communism, capitalism does not lie. It does not state that all people are equal monetarily.

    Throw him out of office or is it already too late?


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