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Blackouts Plague Energy-Rich Venezuela

By SIMON ROMERO
Published: November 10, 2009

CARACAS, Venezuela — This country may be an energy colossus, with the largest conventional oil reserves outside the Middle East and one of the world’s mightiest hydroelectric systems, but that has not prevented it from enduring serious electricity and water shortages that seem only to be getting worse.
President Hugo Chávez has been facing a public outcry in recent weeks over power failures that, after six nationwide blackouts in the last two years, are cutting electricity for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana. Now, water rationing has been introduced here in the capital.

The deterioration of services is perplexing to many here, especially because the country had grown used to cheap, plentiful electricity and water in recent decades. But even as the oil boom was enriching his government and Mr. Chávez asserted greater control over utilities and other industries in this decade, public services seemed only to decay, adding to residents’ frustrations.

With oil revenues declining and the economy slowing, the shortages may have no quick fixes in sight. The government announced some emergency measures this week, including limits on imports of air-conditioning systems, rate increases for consumers of large amounts of power and the building of new gas-fired power plants, which would not be completed until the middle of the next decade.

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.

“We’re paying for the mistakes of this president and his incompetent managers,” said Aixa López, 39, 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 electricity companies.

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.”

While Mr. Chávez zeroes in on such issues, Venezuela’s declining public services offer what may be a view into the “resource curse”: the idea that some countries with abundant natural resources have societies hampered by sometimes sharp political discord, stunted growth and glaring inefficiencies.

On paper, at least, Venezuela should be swimming in surplus power. The country has huge reserves of oil and natural gas and sizable coal deposits. Its Guri dam complex, built with postwar oil riches in the 1960s, ranks as one of the world’s largest hydroelectric projects.

Guri provides Venezuela with as much as three-quarters of its electricity and, just as crucial, allows Venezuela to export about 500,000 barrels of oil a day that might otherwise be needed to meet electricity demand.

But energy economists here said a combination of negligence and poor planning pushed Guri to its limit in this decade, while other electricity projects, including several built in recent years to be fueled by natural gas, remain completely or partly idle.

Mr. Chávez’s government blames relatively low rainfall this year for low water levels at Guri and for declining water supplies for Caracas. But former officials in Mr. Chávez’s government interviewed here said the problems were more daunting than a lack of rain.

They said the president encouraged consumption with a 2002 decree freezing electricity and other utility rates. A time-zone change by Mr. Chávez in 2007 that turned clocks back half an hour also led consumption to climb (the sun sets earlier here than before).

Meanwhile, nationalization effectively halted renewable-energy projects, like a plan by the AES Corporation, which used to control the main electricity company in Caracas, for a wind farm on the Paraguaná Peninsula. Despite Venezuela’s large wind and solar potential, renewable energy here remains negligible.

Most significant, though, may be the government’s failure to use its immense natural gas reserves, the second largest in the Western Hemisphere after those of the United States, to fuel existing power plants.

Venezuela’s gas is technically hard to extract because almost 90 percent of it is associated with oil, but major projects have languished even as Venezuela’s neighbor, Trinidad, taps adjacent gas reserves with ease. Venezuela relies on Colombia, with which ties are increasingly tense, for gas imports.

As a result, there is a disconnect between Venezuela’s energy potential and its ability to keep the lights on. Billboards here extol a “natural gas revolution” and the prowess demonstrated by a satellite put into orbit last year with China’s assistance, while daily blackouts plague poor areas where the satellite was supposed to help provide phone and Internet services.

“The problem isn’t a lack of money,” said Víctor Poleo, a former Energy Ministry official under Mr. Chávez. “It’s the irresponsible and corrupt militarism that has replaced the professionalism of the industry.”

Meanwhile, homes and businesses across the country are adapting to the erratic supply of power and, here in Caracas, of water. Sales of small generators, candles and water storage tanks are surging. Reflecting the unease of the already strained industrial base, which developed around access to ample and cheap power, Sidor, a steel maker in Ciudad Guayana, said it was shutting down its furnaces five hours a day because of the cuts.

“If this crisis teaches us something,” said Fernando Branger, an energy expert at the Institute of Superior Administration Studies, a Caracas business school, “it is that the immensity of our energy reserves means nothing if we cannot even get them out of the ground.”

María Eugenia Díaz contributed reporting.