Chavez’ folly: He owns and controls everything, but they don’t work. It can only get worse

October 21, 2008


On Sunday,
Venezuela
had its third large
scale blackout
of the year. Blackouts occur daily all over the country, but
these large scale ones are a new phenomenon which coincidentally has occurred just
a year after the Government took over all of the private electricity companies
in the country.


As has been the case in each one, the word “sabotage”
was mentioned immediately by a number of Government officials, but as usual,
there is no evidence of that. Yesterday the Head of the Government’s
power company admitted
it was a bad adjustment in the protection system that led to the blackout, while
the usual fanatics, such as the President of the Electric Power workers union,
who doubles as a pro-Chavez Deputy of the National Assembly, continued talking
about sabotage. Meanwhile the Prosecutor detained the three workers responsible
for the bad adjustment.

In fact, the President himself praised the speed
with which electricity was restored as evidence of the effectiveness of the
state’s electric power system. Unfortunately Chavez said that it only
took 15 minutes for power to be restored. This must have been for the Presidential
palace because I certainly had no lights for over two hours and some parts of
the country had to wait as much as six hours to see the light. A Government
official actually said about four hours after the blackout that it had been
restored in 80% of the country contradicting the President or those that suck
up to him by hiding the truth.

So the pantomime continues, while Hugo Chavez
promises a refinery one day, a pipeline the next and to solve the electricity
problem before the end of the year, nothing happens. A government that does not
believe in know how and expertise. Who thinks that anyone can do any job
(including being president) is setting back the country a few decades. The
money that should have been used to improve the electric power infrastructure
of the country was instead used to satisfy another whim by the autocrat. He spent
a couple of billion US dollars buying out perfectly functioning electric private
companies, while the rest of the power system own by the Government deteriorated.
Just
look
at the power generation plant Planta Centro, a 2 GW plant owned and
run by CADAFE, the state’s electric company.  

So, the Government spent money on buying working
companies when oil was high, rather than invest in repairing or building new
electrical infrastructure.

Substitute electric power for oil, telecom, water
services, whatever you like and you know what may happen. Of course, in Chavez’
folly oil will stabilize around US$ 100 per barrel, but guess what, it ain’t
happening, as the Venezuelan oil basket hit US$ 68 last week, down to the
levels that gave the Government so much problems in 2007, except that the cost
of producing Venezuelan oil is up from around US$ 21 per barrel to US$ 28 per
barrel during that period:

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