Merida, February 9th, 2010 (Venezuelanalysis.com) – Venezuelan president Hugo Chavez declared a state of emergency in the electricity sector Monday night on national radio and television. The emergency decree permits the electricity minister to take extraordinary measures, instructs the National Electricity Corporation (Corpoelec) to accelerate its schedule of infrastructure and investments and calls for an education campaign around energy saving.
Citing the prolonged drought which has left Venezuela’s principal energy source, the Guri hydropower dam, diminished, as well as increased demand and consumption of electricity, the presidential decree 7,228 called for “efficient use of, and saving of electricity”.
It motivated the emergency declaration, saying that, “electricity is an activity that involves the safety and defence of a nation” and is, “an indispensable service for economic development and quality of life of the people”.
As a consequence of the electricity shortage, the decree announced “a state of emergency regarding the national electricity service… for a period of sixty (60) days…which authorises the minister of electricity to take extraordinary measures”.
Such measures include taking urgent steps so that both private and public entities pay debts owed to Corpoelec, an acceleration of the installation of energy infrastructure, adopting economic and technical measures to conserve the electricity service, and making agreements with “independent national or foreign providers to buy electricity exclusively to address national demand”.
The decree instructs the ministers of education, higher education, communication and electricity to elaborate an education campaign around saving energy.
To address the large rate of illegal or tapped use of electricity, mostly in poor neighbourhoods, by informal street workers, and other businesses, the decree instructs relevant authorities such as police, judiciary, state and municipal governments to support the reduction of unauthorised connections and assist with “the regularisation of the service to those users connected to the network without a contract”.
During his announcement late last night Chavez also said the government has decided to reward and penalise electricity use, with residential users (defined as using less than 500kWh) who reduce consumption by 10-20% receiving a 25% discount on their bill, and a 50% discount for over 20% reduction. Those who don’t reduce use by 10% will receive a 75% surcharge, and those who increase their usage by 10% will receive a 100% surcharge, and by 20%, a 200% surcharge applies.
The commercial sector, Chavez said, should reduce its consumption by 20% in relation to the same month last year – 10% in the first month and 10% more in the next. Failure to comply will result in service suspension of 24-48 hours, and if the violation is repeated, an indefinite suspension.
However, in order to assist with the recovery of the electricity service, the government is also planning large investments. Chavez said that during March, investments in infrastructure should see an additional 540 megawatts enter the system, or 800 megawatts in the first half of the year, with an aim of 4,000 megawatts for the whole year. Venezuela’s overall consumption is currently 17,000 megawatts.
He said that efforts would be oriented towards Merida state and those regions most affected by the shortages. Merida now has daily two hour long scheduled power cuts, and according to Chavez the government will install 60 additional megawatts in one substation there, which will be ready by 28 February.
Chavez gave further details of specific infrastructure investments, such as upgrades of various thermoelectric plants around the country by 40-80 megawatts, the modernisation of a plant in Carabobo state, incorporating 320 megawatts by the end of March, and adding 175 megawatts to Guayana’s supply. Venezuela’s heavy industries, based in Guayana, have suffered large production decreases due to the lack of energy.
Electricity minister Ali Rodriguez said the government hopes to reduce dependence on hydropower, currently at 70%, to 50%, by increasing the output and number of thermoelectric plants. This will involve an overall investment of over $4 billion, he said.
The government has also been receiving advice from Argentina, Brazil and Cuba, and has signed agreements around electricity with Russia and China. Among the possible plans with these countries, Venezuela is considering a joint wind farm project with Argentina.
“The Argentinians… will arrive on Thursday to help with the creation of new programs for the electricity service,” Chavez said.
Rodriguez also explained that Brazil is restoring the turbines of Venezuela’s main dam, and two of the thermoelectric plants which will be installed to help Venezulea’s large steel plant, Sidor, meet its energy needs, will come from Russia.
Opposition press and spokespeople have generated some controversy over Cuba’s involvement, with opposition papers suggesting that the Cubans are “inexperienced” and calling the Cuban Minister of Information Technology and Communications, who is directing the advice commission “repressive” and “the great censor” (El Nacional, 3 February 2010).
Rodriguez responded that Cuba “has a lot of expertise on the subject of energy saving and efficiency… they’ve carried out extraordinary work in replacing inefficient apparatus, substituting light bulbs and have established a generation plan that …prevents a problem in one place affecting other areas.”
According to Rodriguez, the Venezuelan government has increased electricity generation by 52% over its 11 years of management and reduced the demand on the main hydropower station from 87% to 70%.
Initially, at the beginning of January, the government launched an energy saving plan, involving early shop closing times, replacing incandescent light bulbs with fluorescent light bulbs, and penalising electricity bills by 20% when high energy users failed to reduce usage by 20%. However, the plan only saw a reduction of 4% in total energy use, and as the drought continues, the government explained that more drastic measures are necessary.