Archive for April, 2016

Tale Of Two incompetences: The Electric Crisis And The Bill supply

April 27, 2016


As I watched the Vice-President announce yesterday from the Guri dam, that public workers will no longer work from Wednesday to Sunday in order to save electricity, I could not help but wonder how limited in their understanding that pathetic civilian-military combo in the picture above is. By now, they have become a parody of a Government, but they still want to stage the announcement for the benefit of some imaginary crowd that they think will applaud  and cheer them on, as they get their feet dirty, for once, but really do nothing to solve the problem at hand.

They simply have no idea how to solve it. They never have. Seventeen years running around like a lost electron, without knowing what to do.

And two current crisis (among so many) show the incompetence of Chavismo at solving any problem. The electric problem, a complex technical issue that has been mishandled from the beginning and caused by Chavismo and now the shortage of currency bills in the country, a problem created and executed with all of the whole hearted incompetence of Chavismo management, but which lacks any technical component or complexity, beyond simple common sense.

But Chavismo has botched up both, the complex one over and over and the simple one with its sheer and remarkable stupidity.

The electric problem began in 2000 with the all-knowledgable full-of-himself Jorge Giordani, who had a Bachelors in Electrical Engineering and a belief that he knew it all, which led him to cancel or postpone some hydroelectric projects in the Caroni basin, the same one as Guri. This was done in order to save money and because he did not believe in hydroelectric power, only in the magical power of Hugo Chávez apparently. Reportedly, he included in his wisdom that he thought Guri had plenty of power for our little Nation, a fact that I have been unable to confirm.

If you put together this, with Chavismo getting rid of anyone with any technical knowledge that was not fully loyal to the cause, and over the next few years, the electric problem got worse and more complex. Lack of investment at Cadafe and Edelca, now part of the all powerful Corpoelec, which includes the nationalized electric companies in 2007, only compounded the problem.

As if this was not enough, in the middle, Chávez brought Cuban advisors (Or Fidel sent them?) who at least were honest enough to suggest stuff they knew: The building of localized power plants where needed like in Cuba, isolated from the very distributed and highly interconnected system Venezuela had, a highly sophisticated system with power sharing.

Plants were built without transmission lines, the Government overpaid, many people made lots of money, as Venezuela paid over twice the internationally recognized price per MW. Meanwhile a parade of politicians with no technical background or an idea of how to run such a complex operation, from Comandante Fausto to Jesse Chacon, to Hector Navarro, to the current military officer playing boy scout that presides the Electric Ministry, were incapable of making the right,  if any, decisions. They had no clue and had few people around them with the know how.

Meanwhile, Guri was ignored, not because they knew there was no problem, but because it was better to give contracts to new people and companies, that pay maintenance to the original manufacturers of the systems and turbines that were the only choice to fix and maintain Guri.

And as the 2010 El Niño hit, the country came close to collapse, but the rains saved the day. Once the storm passed, the problem was ignored once again, there was money to be made elsewhere and despite the very ignorant boast by Jesse Chacon that he would fix the electric problem in 100 days, a recognition of how little he understood its extent and complexity, Guri continued to be mismanaged and ignored.

Mismanaged, not only because little maintenance was done, but also because the dam was no longer “managed”. A friend that worked at Edelca 35 years ago tells me that there were sophisticated computer models of how to manage the dam that can not be in operation today, otherwise the dam would have been shutdown.

And we stand today at the brink of a huge black out after two years of low rain, but not the dramatic drought the Government wants to convince us this is. And as 1600 mm. separate the country from a disaster, all Chavismo can do is tweet and be on live TV from the side of the dam, showing their incompetence. Only rain can solve the problem that Chavismo created and has been unable to fix.

However there has been a lot of rain in the last ten days and the level keeps dropping.

Contrast this with the currency bill problems. A simple problem when you come down to it. Printing bills cost money, so as inflation heats up, you design a new higher denomination bill, saving money on the number of bills. You send a purchase order, Pay for the bills and they arrive. As simple as that.

Instead, as Bloomberg reported today, as I was writing this post, The highest denomination bill is worth less than a dime, no new bill has been designed and after plane loads of bills arriving in the country to relieve the scarcity, the country stops paying the companies that print the bills.

No more bills for you!

A very simple process of decision making was interfered upon by an ignorant President, who did not want to print higher denomination bills, lest the citizens discover that there is inflation. As if the citizens were so stupid to not notice it when they go to buy food. And then to top it off, refuse to acknowledge the problem, bringing increasingly larger amounts of bills. Why pay if the printers keep sending them?

Until they didn’t.

Total incompetence on a very simple matter. You can’t make this stuff up. It just shows that whether simple or difficult, Chavismo has no clue about management, knowledge, technical issues, execution, costs and such complicated issues. If they only could use their political Macchiavellism to attack either of these  problems, whether simple or complex!

But everything is improvised. Just think, there is little evidence that sending people home saves any electricity. In fact, over Easter, a national holiday was decreed for ten days and according to Government officials, there were no significant savings. So, let’s simply not use what we learned then and completely paralyze the country. Who cares?

Venezuela is rich, what’s a few months without Government workers doing anything?

It’s Chavismo incompetence at its best!

PCNI IV: Number Of Ships Arriving Has Not Recovered

April 21, 2016


I was hoping the number of ships coming into Puerto Cabello would pick up before reporting, but since late March, I have not seen a single day with more than three ship on a single day. This just means that the Government is simply sacrificing imports in order to to comply with its international obligations. This also means that shortages should accentuate in the coming weeks, since the number in January was in the mid-teens.

I apologize for being the bearer of bad news, but that is what the numbers are saying today.

I will only report in the future on the PCNI if there is a significant pick up in the number of cargo ships coming into the country via its most important port.

Is Drought Really Causing The Problems With Guri Dam?

April 17, 2016

The title of this post may seem strange to some, when you look, for example, at the pictures in this Reuters report, it certainly seems like there is a drought in Guri, except that if the pictures were of the bottom of the now half -dry lake that forms the dam, it is obvious that it will look dead and drought-like in the pictures.

When I was in Caracas, someone told me that they had gone fishing in one of the tributaries of the river Caroni and the water level was quite high, something that was later confirmed by another friend who went fishing in the La Paragua river and saw the water level rise by a meter in a few days.

Despite this, the dam level keeps going down, so, what gives?

Both of my friends deduced from this, that the problem was not drought, but the managing of the Guri dam.

I stored this information in the back of my mind and did not look into this for  a couple of weeks, but all of a sudden, this blog post by Roger Andrews came out. While Andrews is not an expert in this particular field, he seems to be someone that likes charts and numbers and understanding problems. What Andrews showed, and I will come back to it, is that this has not been an anomalous year in terms of rainfall in Guri and that the problem with the water level was simply overuse of the dam to generate electricity.

It is useful before we discuss this, to show you an overall map of the area of Guri:


On the left, you can see the overall area in the Southeast of Venezuela down to Brazil and Guyana. In the blow up on the right, you can see the Caroni river and all its tributaries, which is the area that feeds the dam. What matters in the end, is what rainfall is doing there, not in Caracas or Maracaibo or even Ciudad Bolívar, far from the dam, bot in the basin of the Caroní river.

What Edwards did, was to look at the data in five rain stations in Bolivar and Amazonas and see if rain was particularly light in the last few years. Here I show two of them: Tumeremo, to the right of the dam, and Santa Elena to the South and which is in the Caroni basin:

PluviometriaAs you can see, rainfall in Tumeremo was in 2015 about the same as any other year and in the case of Santa Elena, rainfall levels were at 200 mm per month level, not exactly low given the long term record.

While I could not find a long term record for the Santa Elena Station, I did find the record for Kavanayen nearby:

KavaThis graph shows the maximum rainfall at the Kavanayen Station (black), the average (blue) and the lowest level (red) from 1969 to 1998 (Funny, there is no data after Chávez was elected)

As you can see 200 mm. is way above the lowest level ever measured.

Just to make sure, Edwards blew out the data and I will show what is seen for Santa Elena:


As you can see, last year was not too different than any of the past five years, when there was no “El Niño” to blame the supposed drought on.

At this point I wished I had current data for the stations with a long term record to compare. But then, a person I follow in Tweeter (@meteovenezuela) posted the following recent rainfall map:


This is a map of the Caroni river basin above Guri, showing the accumulated rain from March 15th. to April 13th at a number of stations. What is interesting is that we have two stations that we can compared to the long term record: Kavanyen and Uriman. At Kavanayen, the rainfall was 229.1 mm for this almost one month period. This number is way above the average rainfall for April 1st. from 1969 to 1998 in the graph above, which was of the order of 150 mm per month, and we are  talking about comparing to the average! Not to the lows…

We can do the same thing for the Uriman station, close to the dam as seen above above, where the rainfall was 151.7 mm in the same almost one month period.

Below is the long term record for this station:


I have placed a red dot on the curve with the data for this year, as you can see, it is right on the historical average, far from being an anomalously low value, as the presence of a severe drought would require.

Despite this, the Guri dam level continues to go down…

And to increase the mystery, I found this plot of the water volume in the Caroni river tweeted by @800GWHMWH:


Clearly, the volume of the river is at levels which are historically high, not low.

I am no expert, I just enjoy looking at data and graphs, I have looked for as much new data to complement Edwards’ and I must say, everything that I have found confirms what he concludes. I do hope one or many of the readers of this blog can help me in getting more information and data and debunking the Government’s claim that this El Niño-induced drought has been anomalously strong, because it certainly does not look like it.

In closing, I show a plot of the peak power demand in Venezuela in the last few years:


Clearly, despite the billions that were invested in order to increase power generation, we are now back to 2007 levels, indicating that something has been going downhill in the grid and I would bet, this has to do with the overuse of Guri, to compensate the decline of the whole network.

Hyperinflated Arepa Index (HAI) XIII: Soviet-Style Inflation

April 13, 2016


Six weeks ago I went to Caracas and had my arepa de queso de mano and to my surprise, the price did not go up at all. Surprise, because everything else seems to have increased dramatically this year. In fact, I went to the Chacao free market too and the typical Venezuelan cheeses I love, had gone up quite a bit, between 20-30%.

Thus when I went back last week I was not only expecting the price to go through the  Bs. 1,000 barrier, but I was expecting it to go much higher then the Bs. 1,100 I was charged. In fact, I go during the week for lunch to a different arepera which is cheaper, but this time it was more expensive. At Bs. 1,100, the price rose by 15.7% in two months and the 12 month increase was the highest ever at 486%.

Since I began in November 2014, the arepa has now gone up almost by a factor of ten.

I was so eager to eat the arepa, that it was not after I took the first few bytes that I realized something was different: The arepa was smaller, it was thinner, had a smaller circumference and less cheese inside. What the arepa was seeing was Soviet-style inflation, since in the old days of the Soviet Union, products would seldom rise in price, but will simply shrink to keep inflation low.

Sort of like this, although it is an exaggeration:



It is unfortunate that I did not notice the change (I don’t find out the price until I pay) or I would have taken a picture and compared with the one above taken earlier. I promise to take a picture next time and show you the evidence.

This makes total sense from a competitive standpoint. As inflation has soared, the price of an arepa is becoming too expensive for large segments of the population. Thus, keeping prices low by shrinking the arepa is certainly going to drive traffic in.

Depressing, but true!

Venezuelan Supreme Court Vetoes Amnesty Bill. ¿Surprised?

April 11, 2016


The Venezuelan Supreme Court (TSJ) declared today that the Amnesty Bill was Unconstitutional. No surprise there. Anyone that was not expecting it has to be pretty clueless about Venezuela. In a few words, the TSJ said that the Amnesty Bill ignores the justice for those victims of those that were supposed to be freed with this measure.

What this means, is that the TSJ simply said no Amnesty Bill can ever be Constitutional, ratifying what I believe is the new Article #1 of the Venezuelan Constitution:

Article #1: All Bills approved by the opposition-controlled National Assembly are unconstitutional.

You see, arguing some vague “victims” did not get Justice, is simply going about it backwards. The Constitution says that Amnesty will not apply to cases where Human Rights were violated or international treaties were not respected. But Amnesty works the other way around, if Amnesty is approved, you look at the individual case and determine if someone’s Human Rights were violated.

Take two simple cases, Leopoldo Lopez and Antonio Ledezma, the first one was not convicted  for violating anyone’s Human Rights but somehow “subliminally” encouraging other to be violent and cause deaths. Ledezma’s case is even weaker, for the simple reason that there has been no Justice for him, he has received no trial, nor is he being accused of violating Human Rights.

Just to make the case clearer, Hugo Chávez was one of four leaders in a coup where over 200 people were killed, a clear violation of the very Human Rights of the victims, including that of the then President Venezuela and his family who were the intended “victims” of the failed coup. But all of them received Amnesty and the protests in favor of Amnesty were led by none other than Nicolas Maduro and many of the “leaders” of Chavismo. How “principles” change…

Except that the original sin of the current opposition leadership was to accept the first decision of the TSJ after december 6th.,  which questioned the swearing in of the Amazonas Deputies. If the Assembly was not willing to have the much expected showdown (see here, for example, written on Dec. 20th.), it should not have sworn them in to begin with. But once it did, it should have never backed down.

That’s what showdown means…

But it did and with that action, it abrogated a significant part of its power and the TSJ saw it as a sign of weakness. Since then, the new Article 1 of the Constitution, as interpreted by the TSJ, has ruled.

It is by now a one way street, like the picture above.

In the end, the National Assembly has little power except when it comes down to budgets. It can not only change them, but can also remove Ministers and create the veil of illegality on the part of Government officials. But so far, it has not taken any advantage of this. Had the Assembly removed a Minister here or there, or change the budget in certain areas, it would have created at least the fear that some day the law would come crashing down against someone in charge of spending today.

But the supposedly ever-so-clever chosen Head of the National assembly has done little but tweet suggesting any of these actions.

And the path is clear. Amnesty Bill? Not Constitutional. Recall Referendum? Not adjusted to the law, therefore not Constitutional. Ans so on..

Time is running short. Chavismo has set its sights on surviving until Jan. 10th. 2017. After that day, any removal of the President will imply the Chavista Vice-President will be in place until 2019. By then, who knows where oil will be at, who will be President or whether the TSJ will remove some members of the National Assembly. Much like Cuba for almost 60 years, Chavismo’s only plan is not the “people”, but just survival.

And so far, they seem to be doing a great job. Unfortunately, the opposition has not been up to the job of creating the expected showdown.