CAGUA, Venezuela — Blessed with huge oil and natural gas reserves as well as massive rivers that power hydroelectric dams, Venezuela is energy rich. So why do the lights keep going out?
In 21 of the country’s 24 states, blackouts and power rationing are keeping thousands of businesses, schools, hospitals and neighborhoods in the dark.
Besides dragging down the economy, the energy deficit has become a political problem for President Hugo Chavez, who plans to run for another six-year term in 2012 but whose government has been unable to solve the problem.
“This is a crisis that an energy-rich nation should not have,” said Jose Manuel Aller, an electricity expert and professor at Simon Bolivar University in Caracas.
The power cuts are endemic in places like Cagua, an industrial city just west of Caracas.
“We’ve had problems for two or three years but this is the worst,” said Alexander Bondarenko, president of the Cagua Chamber of Commerce and Production which represents 242 companies ranging from glass factories to breweries.
“Before, the power cuts were programmed and people adjusted,” he said. “But now the electricity comes and goes without any warning.”
During a recent visit to the Dematorc factory, which makes nuts, bolts and screws, human resources manager Ingrid Nunez was in a good mood because a recent power outage lasted just 10 minutes. Usually, Nunez said, the lights go out for four or five hours or for the entire day.
Even when there is electricity, Dematorc can’t always get the raw material it needs because power cuts at Venezuela’s main steel plant have led to periodic steel shortages. To survive, Dematorc is now purchasing nuts and bolts and focusing on distribution rather than production, which has fallen by half. The workforce has been reduced from 50 employees to 24.
“If this situation continues, unfortunately, we may have to close down,” Nunez said.
Having nationalized the last remaining power generation companies, the government fully controls the electricity sector. In fact, Venezuela is one of the few countries in the world that has named a minister of electricity. Yet the government downplays its own role in the crisis.
At first, the government blamed a spike in demand amid a 2004-2008 economic boom. Then, a drought brought on by the El Niño weather phenomenon lowered water levels at the country’s hydroelectric dams decreasing generating capacity.
But critics point out that the economy has recently slowed down, demand has fallen, and torrential rains have refilled the dams.
Now, the government is pointing fingers at the opposition. In speeches, Chavez often claims that electrical plants are being sabotaged by his political foes to make his government look bad.
“I call on the Venezuelan people … to help neutralize the electrical sabotage being carried out by the lackeys of the bourgeoisie,” Chavez told an audience last year. “They think that by sabotaging an electrical plant or a transmission line, people will stop voting for the revolution. But they are very wrong.”
Yet no credible evidence of sabotage has emerged. The government also blames consumer waste and has aired a series of TV spots urging people to turn off lights and appliances.
But there’s no incentive to conserve because, similar to the country’s notoriously cheap gasoline which costs less than bottled water, electricity is subsidized. There hasn’t been a rate hike in nine years so most households pay monthly bills of between a few dollars and nothing.
Aller and other critics claim the problems stem from government corruption, poor decisions and a failure to invest in the grid — which is partly due to those rock-bottom electricity rates.
A prime example is the Guri hydroelectric complex in eastern Venezuela, which generates 70 percent of the country’s electricity. Aller says not all of that power reaches the rest of the country because of the poor state of transmission lines.
On top of that, a series of Venezuelan governments over the years focused on exporting the country’s oil while many natural gas reserves were never exploited. Instead, the country relied on hydroelectric power and failed to build a new generation of oil or natural-gas powered thermoelectric plants.
Most of the thermoelectric plants now in operation are at least 30 years old and often break down. They are currently operating at only 40 percent of their capacity, Aller said.
The one city that remains unaffected is Caracas, the capital. Programmed power cuts to save energy were introduced last year but the government quickly retreated amid massive protests in poor neighborhoods that usually support Chavez. Now, the power stays on but homes and businesses must pay stiff fines if consumption goes beyond a certain point.
“The government is clearly protecting Caracas but that leads to blackouts everywhere else,” said Jose Toro, a former board member of Petroleos de Venezuela, the national oil company. “Now, Caracas doesn’t have a problem but the rest of the country is paying for it.”
With little official information on the location and cause of power outages, Venezuelans are spreading the word via Twitter. Aller, who blogs about the electricity crisis, keeps a close eye on the Twitter feed which, on a recent afternoon, reported outages in a half dozen towns and cities.
Amid the blackouts, some Venezuelan businesses are taking emergency measures.
Fanagram is an animal food plant in Cagua. When the outages first began, the company's clients couldn’t even get into the driveway because the electric door wouldn’t open.
Despite electricity cuts every other day, production here continues — thanks to a diesel generator. It cost $20,000. But without it, Fanagram would be in dire straits, says plant supervisor Mauricio Power.
“Any business that doesn’t have a generator,” Power says, “is at the mercy of government officials who decide when to turn the electricity on and off.”