In 1998 Venezuela’s electricity system was operating efficiently. Experts say that, by that year, 94% of the national territory was electrified and 97% of the population was interconnected. Lets see The Real Causes of Venezuela’s Electrical Collapse.
Twenty years later, the power plants built are barely operating. The blackout of March 7th 2019 exposed the reality of the system.
In order to understand the electrical crisis that Venezuela is going through, it is necessary to put a magnifying glass to the problem.
The decline of the system dates back to the late nineties. When it was imminent to establish an institutional agreement for the proper functioning of electric service. In order to promote private investment in the coming century.
Thus, in 1999, in order to achieve these goals, the “Electricity Service Law” was proposed to Congress. The purpose was the liberation of the sector, since the country was going through a fall in public investment. The private sector were not allowed to have greater participation.
Hugo Chávez and The Real Causes of Venezuela’s Electrical Collapse
The fall in investment placed “the country in the face of a real energy emergency”. Former President Hugo Chávez himself admitted it before Congress.
The law, explains former Vice Minister of Electric Energy Victor Poleo, contemplated aspects such as:
- Water value and economic dispatch.
- Formation of electricity prices in exchange nodes of the Trunk Network.
- Competition in generation.
- Synergies between public and private capital.
- Synergies between the National Petroleum Industry and the Electric Sector, critical in the production of thermoelectric fuels.
But the “chavismo (United Socialist Party of Venezuela)” never approved it.
Already in 2001, the engineer and former director of the Office of Operation of Interconnected Systems (OPSIS, in Spanish), Miguel Lara Guarenas, recalls that his entity, responsible for directing and coordinating the operation of the National Electric System (SEN, in Spanish), alerted the Executive that the country was heading towards a “situation of deficit of the electric supply” due to erroneous decisions taken by his cabinet.
And, although warnings were given in time and a commission was appointed there was never action.
The Real Causes of Venezuela’s Electrical Collapse
On the contrary, says Lara Guarenas, the government decided to:
- Suspend the policy of methodical maintenance of the system.
- Began to remove people from their jobs and put people who were not suitable.
- Bulked the payroll with family members or politicians who were not qualified to work in the area
- Froze the electricity prices.
The decline of the sector began to take its first steps, a process that was strengthened more and more with the “evils” of CADAFE (National Electric Company).
Since the corruption within the state-owned company “due to the over-invoicing of projects and the delay in making them concrete” caused the now subsidiary of “CORPOELEC” to have an energy generation of 1,215 MW. That is, 33% of its accredited capacity (3,721 MW) before the National Interconnected System, adds Víctor Poleo.
Likewise, the state-owned company “administered 643 million dollars in 223 transmission projects (lines and substations) and, nevertheless, the projects finally executed by CADAFE correspond to only 155 million dollars, that is, 24%,” he said.
CADAFE
Among the plants to be built by Cadafe are:
- The “Fabricio Ojeda” in “La Vueltosa”, located in the state of “Merida”, with an investment of 160.4 million dollars.
- The “Palavecino” plant in the state of “Lara”, whose budget was 55 million dollars.
- And the “Pedro Camejo” thermoelectric plant in the state of “Carabobo” with a budget of 107 million dollars.
However, Cadafe was not the only company with irregularities within its functions. “Electrificación del Caroní” (Edelca), a company controlled by “Corporación Venezolana de Guayana” since its creation in 1963. In 2005 by presidential mandate agreed with the OIV Consortium, formed by the Brazilian company Norberto Odebrecht S.A., the Italian company Impregilo and the Venezuelan company Vincler, to begin construction of the “Manuel Piar” Hydroelectric Plant, better known as the “Tocoma” dam in the lower “Caroní river”.
“World Energy Power.”
On September 22th, 2006, former President Hugo Chávez ruled that Venezuela would soon be a world energy power. An aspect that was contemplated in the “Simón Bolívar National Project”.
With the consolidation of the socialist model, the nationalization of the electricity industry was a fact. Decree-Law No. 5,330, of July 31, 2007, containing the Organic Law of Reorganization of the Electric Sector unified under the name “Corporación Eléctrica Nacional S.A”. (National Electric Corporation). (Corpoelec) to Edelca, Enelven, Enager, Cadafe, Enelco, Enelbar, Seneca, EDC, Eleval, companies that until then had been in charge of the production, distribution and commercialization of electric service in the country.
Three years later, the Organic Law of the Electric System and Service was established. Thus reinforcing the nationalization and centralization of the entire sector.
That same year, the construction of the “Parque Eólico Paraguaná”, in Falcón state, was approved. The promise of this investment guaranteed that:
- “With the strength of the wind it will reach 20 MW in a first phase, then 100 MW”.
The park was nothing more than the promise of an energy network that never becomes reality.
However, Chavez’s words were just lies, and only one year after nationalization the crisis was even worse. The blackouts were a fact. As of 2008, “1,248 electrification projects have been financed by the Energy Boards”. But none of them operated efficiently.
The Real Causes of Venezuela’s Electrical Collapse
The thermoelectric plants began to decrease their capacity to generate energy. The distributed generation plants with a capacity of 464.2 MW was establish in 12 states to avoid the electric deficit.
They invested in the purchase of more than 79 million saving light bulbs that would be installed free of charge. The Government assured that the low level of Guri was due to the natural phenomenon “El Niño”. The recurrent blackouts in the interior arrived to Caracas.
Then, the State appealed for a supposed “armor”. It had as its goal that the Thermocenter Generator Complex – located in “Los Valles del Tuy” – satisfy the Caracas demand. With the two plants of 540 MW each, plus the 755 MW of Raisa,” while the Guarenas Thermoelectric, which would cover 75% of the municipalities of the Miranda state. It would also contribute to such armor.
In 2010, the State under the Electric Emergency Decree, acquired through PDVSA’s subsidiary, “Bariven”, 19 turbines to generate 1,000 MW. All this for 767 million dollars.
Months later, specifically on July 9. Former Electricity Minister Alí Rodríguez Araque assured that Venezuela had overcome “the electricity crisis with the installation of more than 1,200 MW”.
The crisis never disappeared, it got worse.
The ultimate ruin of the system
The National Interconnected System of Venezuela (SEN) was build in 1964. Its goal was to distribute the energy of the hydro and thermoelectric power stations.
The program, from its inception, conceived that the hydroelectric plants of “Guri, Caruachi and Macagua – located in the lower Caroní – should supply an average of 60% of the demand and consumption of electricity in the country.
As a complement, Tacoa, Planta Centro, Ramos Laguna. Los Llanos and Los Andes thermal power plants would supply the remaining 40%,” says the engineer. Today the story is different.
The country has 21 thermoelectric plants, four hydroelectric plants and more than 50 substations, but the energy capacity supplied by the plants is insufficient to meet the demand of Venezuelans.
The historic blackout on Thursday, March 7, 2019, which affected 23 Venezuelan states for up to 8 days. It’s said that it was all a product of a fault in Guri. Demonstrating that thermoelectric plants are not generating electricity.
The Ministry of People’s Power for Electric Energy has not delivered official reports since 2016. Its last report was in 2015 with the “Report and Account for 2015” in the National Assembly .
The Real Causes of Venezuela’s Electrical Collapse
It reveals that the entity’s projects were not completed, does not provide information on the control activities exercised by the Ministry, its sectoral policies or the Annual Operating Plan.
However, an analysis by “Transparencia Venezuela” indicates that the Report and the Account present “a lack of explanatory information on the use of financial resources that were not used in their entirety. This happened in 100% of the projects.
For its part, Corpoelec maintains on its website that between 2013-2015 Venezuela’s electricity generation park had an installed capacity of approximately 24,000 MW. With hydroelectric plants supplying 62% of the electricity potential and thermoelectric plants 35%. However, supply and demand of the sector is unknown at present.
On one hand, specialists Winston Cabas, Miguel Lara Guarenas and Victor Poleo say that there is an installed capacity between thermal and hydroelectric power plants of 32 to 34 thousand MW approximately, since the “Parque Eólico Paraguaná” is not operational.
On the other hand, according to Cabas and Lara Guarenas, SEN’s supply is between 10,000 and 12,000 MW, with a population demand of 14,000 MW.
Poleo disagrees with these numbers. For the former minister, 14 thousand MW is the supply of SEN currently, while national demand stands at 25 thousand MW.
The Real Causes of Venezuela’s Electrical Collapse
Above all engineers insist that system failures are due to a mismanagement of investments in the sector.
Cabas warns that thermoelectric plants operate with a deficiency because there is no supply of fuels. Therefore, “PDVSA stopped producing the fuel needed and in its absence had to resort to gas pipelines,” and adds that to transport these gases you need a number of tank truck that are not available. “There are no idlers or roads in good condition”.
We are more dependent on Guri
As a result, the energy capacity of the Guri is being over exploited. The reservoir reached its minimum level of 241.35 meters above sea level on April 29, 2016. Only 1.35 meters from the operating limit of the “Casa de Maquinas II” (240 meters above sea level).
“The little energy that the system produces is in the lower Caroní. This must be taken out through transmission lines and is not maintained, but also should have been replaced or expanded and did not occur. Certainly, the transmission limits of those cables are exceeded and faults are presented” declares the president of AVIEM, Winston Cabas.
“Now we are more dependent on Guri, but it doesn’t work well either,” says Lara Guarenas.
The engineer remembers that the late Hugo Chávez promised that Venezuela would not depend on hydroelectric plants. As a result a series of thermoelectric plants would be built that would demolish this dependence. But, “what they installed is useless and what was there, they just removed it”.
Tocoma, the “large-scale” hydroelectric plant announced in 2002 and whose construction began in 2005, aimed to generate 2,160 MW, or 70% of the national electricity production in order not to over-exploit the Simón Bolívar Hydroelectric Plant (as the Guri, formerly Raúl Leoni, was renamed). In 2012, the Minister of Electric Energy, Héctor Navarro, inaugurated the first unit, but only 205 MW was activated; and in 2014 the project was “concluded”.
Four years later
Four years later, Tocoma does not operate. Its budget initially had a cost of $3 billion dollars, then rose in 2013 to $7 billion dollars and finally positioned itself at $9.365 billion dollars, according to the current head of the portfolio, Luis Motta Dominguez. So, “Tocoma is the great red elephant of the national electrical system. It does not contribute any megawatt,” Cabas said.
Lara Guarenas adds that even if Tocoma is put into operation, there would be no way to distribute its energy to the transmission systems. 60% of the system is in ruins. They did no save nothing, there is nothing. Nor in the offices.
Maintenance
Above all the engineer condemns the fact that the required maintenance of the equipment was not carried out at the time.
Now the units are observed in a “catastrophic” way and there are no national suppliers who sell the spare parts. And the international ones, because of the debts that the State maintains with them, cancelled the service. So, “If you add up the hours of maintenance overdue exceeds 4 million hours. Start adding machine by machine of the interconnected system (…).
Cabas adds another problem. “Presumably used thermoelectric machines were bought and sold to Venezuela as new. So, a “business deal” that electrocuts.
As a result the Joint Commission for the Study of the Electricity Crisis in the country of the National Assembly was in charge of evaluating the conditions of the SEN.
The report shows that during the construction of the Picure thermoelectric plant, which is part of the Josefa Joaquina Sánchez Bastidas generator complex, Derwick Associates -the contractor- the State acquired “General Electric 2 LM 6000 + 2 LM2500 aeroderivative gas turbines (open cycle) with 140 MW in total”.
More corruption
The Commission asked Derwick Associates for an explanation, but the company replied that it ‘cannot provide contractual information due to a confidentiality agreements’.
However, Derwick indicated to the National Assembly “that the average cost of its electrical works was 1.17US$/MW, which is within the international ranks without counting on the financing that the company had to carry out since they were up to 4 years without charging”.
Also the National Assembly considers the main feature of the crisis to be the deterioration of “a large part of the electricity generation and energy transport capacity of the electricity system to meet the electricity demand of the population”.
The Commission also points out that the State, despite having spent “more than 39 billion US$ in the acquisition and purchase of 14,000 MW in thermal power generation plants, money equivalent to four times Venezuela’s international reserves in 2016, only about 4,000 MW are operationally available. Which could perfectly have been installed with a fraction of the resources destined to the sector in the last decade”.
The Dark of Maracaibo
“Marabinos” are in the shadows for more than a year. In December 2017 due to a massive fault the region was in the dark. Since then, those who make life in Maracaibo know that at any moment electricity will go away again. The failure is no longer a coincidence, it is routine.
Maracaibo in the shadows every day
Maracaibo in the shadows every day and the reason is the disconnection it has with the interconnected system. Therefore the former director of OPSIS, Miguel Lara Guarenas, states that Zulia has an installed electrical capacity of 2,300 MW, and Maracaibo has a demand of 1,600 MW; but it is useless because “not even 300 MW work. The little that works is in TermoZulia.
The SEN has an interconnection from the “lower Caroní” of 1,000 MW that reaches the eastern coast, directly to the plants of El Tablazo and Las Morochas, and they supply the western coast of the state.
“The air crossing lines of the towers installed in the lake were made. All that system allowed to carry half of the demand, but the cables were lost, the conductors were changed and the import capacity of the Guri was lost, its own generation does not work,” says Lara Guarenas.
As a result the electrical crisis in Zulia has caused the inhabitants to lose electrical equipment, food decomposition. There was even a complaint that the Maruma Hotel plant explode due to excessive use. The National Assembly has asked Corpoelec to compensate those affected.
Overcoming the crisis
Venezuela’s electric service, considered in the 20th century the best service in the country and a reference in Latin America, will not return. Rebuilding the system will take time, the diaspora also became present in the sector: qualified personnel emigrated.
“You have to put people who have the knowledge, expertise and ethics to manage resources and solve those problems.
Although we will have to see the gaps in what we have and what we need. Resume maintenance, equip the electrical system with inventory and rescue the infrastructure.
The first action
The first action is to put to work what we have and it takes less time. We are not going to have what we had before, but we can have something better,” adds Lara Guarenas, who does not rule out the idea of privatizing the system again.
He insists that in the conditions in which the SEN finds itself “private capital does no harm”. To give a private person the property to have resources is viable and it is an action that has to be thought about”.
Furthermore, Víctor Poleo, in his analysis of the Venezuelan Electric Sector, concludes that:
- It is necessary to vindicate the entire Electric Law of 1999, to rebuild the Electrification of the Caroní
- Use help of nations of hydroelectric tradition and with western manufacturers of hydroelectric equipment.
- Design a capitalization fund for the reconstruction of the Electric System”.
Finally, in spite of the options that may exist, the specialists are agree. In order to overcome the crisis there must be a change of government.
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