The New York Times [2] virtually sneers in a Nov. 12 headline, "Blackouts Plague Energy-Rich Venezuela," reporting that despite vast reserves of oil, coal and natural gas, electricity is being cut for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana, with water rationing instated in Caracas. This has all started since the government has largely taken over the energy sector. "We're paying for the mistakes of this president and his incompetent managers," said Aixa López, president of the Committee of Blackout Victims, which has organized protests in several cities. In some cities, protesters have left household appliances on the steps of state power companies.
The Times reveals that much of the crisis is rooted in problems at the Guri hydro-electric complex [3], built with oil riches in the 1960s, and one of the world's largest. Guri provides Venezuela with up to three-quarters of its electricity, allowing the country to export some 500,000 barrels of oil a day that might otherwise be needed to meet internal power demand. The government blames decreased rainfall this year for low water levels at Guri, and declining water supplies for Caracas. But former government officials (speaking anonymously to the Times) blamed Chávez's encouragement of consumption with a 2002 decree that froze utility rates. A time-zone change instated by Chávez in 2007 that turned clocks back half an hour also led to increased consumption.
"Meanwhile, nationalization effectively halted renewable-energy projects," the Times laments, noting a plan by the AES Corporation, former owner of the Caracas electricity company, for a wind farm on the Paraguaná Peninsula. The account does concede that failure to exploit immense natural gas reserves is likely the "most significant" factor—and here geological factors make it difficult to extract. Venezuela actually imports gas from Colombia. Billboards in Venezuela tout a "natural gas revolution [4]" and a new satellite launched into orbit last year with China's assistance [5]—while daily blackouts plague poor areas where the satellite was to help provide phone and Internet services.
"The problem isn't a lack of money," Víctor Poleo, a former Energy Ministry official under Chávez, told the Times. "It's the irresponsible and corrupt militarism that has replaced the professionalism of the industry."
The account also, of course, made much of Chávez's own idiosyncratic style:
In response, the president is embarking on his own crusade: pushing Venezuelans to conserve by mocking their consumption habits.
He began his critique last month with the amount of time citizens spent under their shower heads, saying three-minute showers were sufficient. "I've counted and I don’t end up stinking," he said. "I guarantee it."
Then he went after the country's ubiquitous love motels and shopping malls, accusing them of waste. "Buy your own generator," he threatened, "or I’ll cut off your lights." He similarly laid blame with "oligarchs," a frequently used insult here for the rich, for overconsumption of water in gardens and swimming pools.
Mr. Chávez is even going after his countrymen's expanding waistlines. "Watch out for the fat people," he said last month, citing a study finding a jump in obesity. "Time to lose weight through dieting and exercise."
At risk of tempting abuse from the chavistas [6], we will point out that if this rhetoric were issuing from the leader of any country in the shrinking "Washington consensus" camp, the lefties would be bashing it as a call for austerity.
That said, the Times' supercilious sneering also misses some important context. It is true that the blackouts began [7] shortly after the nationalization [8] of the energy sector in 2007. But the AES Corporation had problems of its own. Indeed, Chávez's takeover of the company's operations was by mutual agreement, as the company was shaken by financial crisis. This crisis—as well as numerous environmental irregularities—were noted by a 2002 Friends of the Earth [9] factsheet from a campaign against the company's pending Bujagali hydro-power complex in Uganda:
As an independent power producer, AES has been plagued by the Enron effect, its stock price more than 80% off its high. The company has frantically undertaken cost saving measures and sold off assets. However, investments continue to be skeptical. A May 3, 2002 Bloomberg article states that investors and analysts contend that AES is unable to profitably manage businesses in more than two dozen nations and has too much debt to withstand economic turmoil in several countries at once. Yet AES is being pummeled by just such turmoil in Latin America, where it has operations and exposure in several struggling nations, including Argentina, reeling from a profound and seemingly bottomless economic crisis, and Venezuela, where a recent coup attempt has spooked investors.
AES also bills itself as an environmentally and socially responsible company, yet its actions belie that image. In the US, it is currently being sued in California as part of a class action lawsuit charging wholesale power generators and marketers with anti-competitive behavior. Its annual filing with the Securities and Exchange Commission also states that each of the company's businesses in California is being investigated by various state agencies, including the Attorney General's Office and the Public Utility Commission. In May 2000, AES was found to violate the Federal Clean Air Act at two New York State facilities. Also in 2000, the company paid a $17 million fine for excess air pollution at some of its generating facilities in California.
The company has been the target of angry protests and litigation over pollution from Central America [10] to Alaska [11]. And, just for all you conspiranoids, it has also been linked to the ultra-right Catholic secret organization Opus Dei [12].
A Nov. 9 story on Dow Jones [13] details the delays and other problems at another giant hydroelectric plant under construction in Venezuela—the the $4.3 billion Manuel Piar, or Tocoma plant on the Lower Caroní River. Like the Guri hydro-plant before it (also on the Lower Caroní), it is financed by the Inter-American Development Bank [14]. Construction began in 2007, and it is still five years from completion—while plans initially called for completion by 2010.
With the state power company Corpoelec cutting service one or two hours a day across much of the country, Chávez went on his weekly TV show "Aló Presidente" Nov. 8 to boast that when the Tocoma plant finally comes online, Venezuela's electrical-generation capacity will have risen 45% from current levels. In 2014, he said, the country's capacity will be nearly 34,000 megawatts, well beyond its current needs.
The New York Times account, of course, noted an even more hubristic scheme by Chávez—for nuclear power development:
Skepticism also persists over another plan — to develop a nuclear energy program — because it would require billions of dollars and extensive training of Venezuelan scientists at a time of budget shortfalls and falling oil production. Potential diplomatic resistance to Venezuela’s cooperation on nuclear matters with Iran could slow these ambitions further.
Of course the Times notes the nuclear plan (while ignoring the Tocoma debacle) because it is an excuse to invoke Chávez's controversial strategic partnership with Iran [15]. But the real problem with nuclear power is the same as that with mega-scale hydro: it is big, centralized and unsustainable. Chávez's international leftist supporters like to tout the ecological solutions [16] that are being advanced in Bolivarian Venezuela. A Sept. 22 account on VenezuelAnalysis [17] notes that Venezuela is encouraging solar development and importing 20 small generators from Cuba to allow localities to power themselves instead of relying on the crippled grid (plans condescendingly dismissed as backward-looking by the Dow Jones account).
Chávez deserves creds for helping to raise the alarm about global climate change [18]. Let's hope that those among the Presidente's advisors who advance local self-sufficiency will prevail over those with dreams of nuclear and hydro-electric prowess.
See our last posts on Venezuela [19] and regional struggles for control of water [20].
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