Administrative changes necessary to solve power crisis - expert - Venezuela

By James Fowler / Business News Americas
Published: Wednesday, June 15, 2011 16:10 (GMT -0400)

Venezuela's power crisis can only be solved by administrative level changes to remove political elements from managing the system rather than simply throwing investment at new projects, José Aller, an energy specialist and professor at Caracas-based Universidad de Simón Bolívar, told BNamericas.

"We have arrived at a point of structural crisis throughout the whole system. The system is too politicized, investments have been badly made, and political people are running the power companies. Those in charge need to be changed and replaced with people who are technically capable to meet the challenge," Aller said.

Authorities have been forced to introduce rationing measures across the country for the second year in a row due to a series of ongoing nationwide blackouts lasting up to 30 hours in places.

As part of the emergency measures customers face monthly consumption limits ranging from 500kWh to 1.2MWh.Those that fail to abide by the new restrictions will be hit by hikes of up 75% in their power bills.

In the meantime, the government has promised to invest more money in developing new capacity, with US$5bn supposedly set aside for projects over the coming years. Aller, however, insists that this alone will not solve the problem.

"It needs more than just simply investment. That has already been undertaken, and they have invested a great quantity of resources in a generation system which doesn't suit the country's needs."

According to Aller's estimates, only 300MW of more than 1.5GW in new capacity added to the grid since early 2010 is online. The expert also suggests only 80MW of 2.5GW new capacity promised by authorities for this year has been installed.

"At the moment we are only half way through the year, and this indicates that they are only likely to reach 10% of the target. They already have problems with the demand compared to capacity available. Failing to deliver the generation required is therefore only going to add to the problems that already exist," he added.

Instead, the expert suggests that changes in the way the system is run need to be made to help bring about the reform required.

The government is centralizing regional power companies under the umbrella of Caracas-based authority Corpoelec. Aller sees this as a step in the right direction but also calls on the inclusion of the private sector to encourage competition.

"[Centralization] should make the system a bit stronger, but part of the problem is also nationalization. Before there was competition, private and public firms would compete across the system. Now we don't have that."

The complete interview with Aller will be published in this week's Electric Power Perspectives, for subscribers.