No kidding on the destruction.*
From Reason Magazine, August 5:
The regime is paying lip service to undoing a policy that caused incalculable human suffering but is hesitant to relinquish control.
Venezuela's electric grid was once the envy of Latin America. The Guri Dam, completed in 1986, was one of the world's largest hydroelectric plants, and the nation's grid reached
96 percent of households by the early 2000s. Today, after more than two
decades of socialist rule, hours-long outages are routine in Venezuela.
Blackouts disable water pumps, cellular service, electronic payments, and hospital equipment. The independent National Hospital Survey reported
233 deaths from 2019 through 2021 attributable to electrical failures,
including patients who lost mechanical ventilation or could not reach
operating rooms because elevators stopped. In March 2019, a nationwide
blackout lasted roughly a week, provoking widespread looting and property destruction. By 2025, just 10 percent of households reported having no routine electricity interruptions.
The Venezuelan regime is now
reversing the 19-year-old decision to nationalize the industry, which
caused the system's rapid breakdown. The regime-controlled National
Assembly has given initial approval
to a bill that would open the electricity sector to private investment.
The reform would allow private capital to participate in generation,
transmission, distribution, and commercialization. However, the Energy
Ministry would grant concessions, set rates, supervise operators, and
retain broad intervention powers. Licenses could last up to 25 years,
with a possible 15-year extension given to public-private companies. The
bill's text is contradictory about what would happen to private
investment capital once a license expires. The bill doesn't guarantee
currency conversion, profit repatriation, state payment security,
neutral arbitration, or an independent regulator, and it's unclear
whether foreign investors will be willing to risk their capital to
repair the nation's broken grid and power plants.
The destruction of Venezuela's power grid traces back to 2002, when President Hugo Chávez froze utility companies' rates. The regime historically cast
the freeze as a social good, or the "democratization of access to
electricity." Its officials would defend the policy for years: Rates
were "absolutely subsidized" and had been "kept well below any limit of
what should be charged," as Chávez's vice president Elías Jaua later put
it.
Through rampant money printing,
Chávez caused runaway hyperinflation. Prices spiraled, but electricity
rates stayed frozen. Within a few years, electricity for the average
Venezuelan cost next to nothing. Real billing revenue collapsed
83 percent from 1999 to 2015. The country's 14 regional power companies
(a mix of private and public firms) were starved of the revenue they
needed for routine maintenance. Electricity was virtually free, so
bitcoin mining became a thriving industry in Venezuela.
Political meddling prevented
experienced engineers from maintaining the grid. Miguel Lara, a former
manager of OPSIS, Venezuela's once-independent grid planning and
dispatch office, said the executive branch curtailed its authority in November 2001. Lara later said electricity-sector officials had warned the government in writing that year that the country would face a supply deficit in the following years.
In 2007, Chávez nationalized
the electricity industry, creating Corporación Eléctrica Nacional S.A.,
or Corpoelec. "All of that which was privatized, let it be
nationalized," he declared. PDVSA, the state oil company, bought the largest private company in the sector for about $739 million. Chávez folded all 14 utility companies into one vertically integrated state monopoly, Corpoelec, and replaced technical managers with political and military appointees.
"The government started bringing in people ideologically aligned but lacking in managerial skills," Lara recalls.
"Abuses and mistreatment of personnel became rampant." The company was
thoroughly politicized. "Anyone who wouldn't subjugate themselves, go on
marches, wear a red shirt, or appear on Chávez's TV show, Aló Presidente, was fired," according to Lara.
By 2009, the grid had exhausted
its operating reserve and entered permanent rationing. An El Niño
drought reduced water flows into hydroelectric reservoirs and strained
urban water supplies. Chávez blamed the weather and called for
conservation. During a televised cabinet meeting, he urged
Venezuelans to stop singing in the shower and wash in three minutes.
"I've counted, three minutes, and I don't stink," he said. Jacuzzis, he
joked with his ministers, were incompatible with communism.
As rationing became the
norm, government offices closed at lunchtime, stores reduced lighting
and refrigeration, restaurants lost food, and factories slowed or shut down. Chávez called rationing an "electricity diet" and predicted that Jesus would make it rain because he was a believer in the socialist movement. In February, Chávez declared a national electricity emergency. Later that year, the National Assembly enacted a new law reserving generation, transmission, distribution, electricity sales, and grid management to the state.
The emergency spending delivered far less electricity than promised. A 2017 investigation reported
that Venezuela had spent over $39 billion on roughly 14,000 megawatts
of thermal capacity, yet only about 4,000 megawatts were operational.
The nonprofit watchdog group Transparencia Venezuela reviewed
40 generation projects initiated or contracted from 2000 through 2014.
The group estimated that only 4,361 of the promised 17,513 megawatts
became effective and that reported costs exceeded government planning
benchmarks by $23 billion.
Several projects became symbols of
the spending spree. Derwick Associates, founded by politically connected
young businessmen, received emergency generation contracts and faced
allegations of bribery and inflated pricing in investigations and civil litigation. The 2,160-megawatt Tocoma hydroelectric project, estimated to cost about $3.05 billion in 2006, and originally promised for 2012, missed successive completion dates and never generated commercial electricity. Available public records don't reflect how much was ultimately spent.
The regime has never offered a persuasive explanation for the grid's breakdown. Official accounts shifted from blaming the drought and El Niño in the 2010s to accusations of opposition sabotage backed by the CIA, claims that rats and iguanas were eating cables, and a U.S. cyberattack and electromagnetic attack directed from Houston and Chicago on Pentagon orders....
....MORE
So you're saying there is opportunity here, over and above rebuilding from the earthquake devastation?
*At the time:
April 2016 - "Venezuela energy crisis: President tells women to stop using hairdryers and go with 'natural' style to save electricity"
The Bolivarian Workers Paradise is very close to becoming an humanitarian disaster.
It wasn't enough for Hugo Chavez to run the country into the mud, now it seems Maduro is intent on burying it.
So who ends up with the oil?
From the Independent:
'I think a woman looks better when she runs her fingers through her hair and lets it dry naturally,' Nicolas Maduro said...
March 2019 - "'We've returned to the Middle Ages' – life in Venezuela's blackout" (recommended for tips and tricks)
March 2019 - Second Blackout: "'Horror, fear, despair': Venezuela's oil capital shattered by 'tsunami' of violent looting"
June 2019 - Bad Things Happen In the Dark: Venezuelan Blackouts and the Scams The Preceded Them
The power going off, whether because of an EMP, solar flare, climate, or
corruption is quite terrifying for humans and for risk managers. More
after the jump.
From the Organized Crime and Corruption Reporting Project, June 12...
Related:
All that being said I should probably look into having my own Aló Presidente television show.
