Venezuela, the country where electric power plants prices can vary by 100%

February 27, 2010

A few months ago Juan from Caracas Chronicles wrote a post questioning the cost of the power plant to be built by Iberdrola in Venezuela. Basically, Juan noted, the plant hired out by Diosdado Cabello to be built in Sucre State was costing too much compared to world standards at Euros 1,400 per KW.

Well, the Ministers in Chavez’ Cabinet are so disorganized that they don’t even check for the consistency of their numbers. While Diosaddo builds power plants with 1 KW fcosting roughly $2,000, Rafael Ramirez says PDVSA is buying plants from somewhere between US$ 1,333 and US$ 1,500 per 1 KW, while Ali Rodriguez, Minister for Electricity, says he is buying 4,000 MW for US$ 4 billion, that is, US$ 1,000 per KW. These guys can’t shoot straight or figure out who is on first base, that is why Venezuela is in such sorry state.

These guys are so incompetent that they don’t even listen or pay attention to one another. In any seriously run country, this would be a scandal to determine the 100% difference in prices claimed by the different Government officials.

The problem is, that the only plant that has been really contracted out is the Iberdrola one. The rest is fluff, the type of announcements that the Government makes Sunday after Sunday in Chavez’ program to appease the Dicator and make him believe that they are doing something.But these plants are virtual and will remain so for quote a while.

Because there is no doubt in my mind that the Iberdrola plant is full of overcharges and commissions, at $2,000 per KW it will be (If it ever gets built) the most expensive thermoelectric power plant in world’s history. (Has it even been started yet?) But there is also no doubt in my mind that Ramirez’ and Rodriguez’ announcements are just that: announcements and nothing concrete has been signed.

In fact, both of them are lying when they said that most of these power plants will come on line in 2010, Ali Rodriguez said it on ABN and Ramirez in Sunday’ Alo Presidente.

Because even if these plants were built by companies like Bechtel, Fluor and the like, it would take much more than 12 months to have them running, even if construction were to start tomorrow. Which it isn’t. So, imagine with the well-known Chavista inefficiency, everyone trying to get a commission out and the teams in charge being changed every six months or so, how long this will all take. Remember, for example, that in October Corpoelec says that Planta Centro would be back up by the end of February and the turbines in Guri would be online also by February. I hear Planta Centro is not even close to being ready and the turbines, oh well, eight of the twenty are still offline. (Yes!, one additional turbine has gone online since October when the crisis began, way to go Hugo and the revolution!)

This is simply no way to run a country and while Chavistas believe rain will save them, this is not the case. The electric crisis will last at least until 2012 and with these people in charge, maybe forever. And forever is a long time, like the song says.

Because most of these guys prefer to go on shows like the picture above, rather than wait for the work to be finished before they have the show. Problem is, they are so incompetent that they would never ahve much to show off anyway.  But if rather than spend so much time talking and on TV, they worked hard, maybe they could get a little more done that they do.

Some revolution!

14 Responses to “Venezuela, the country where electric power plants prices can vary by 100%”

  1. butbutbut Says:

    I called one of the top New York consultants on power plant prices to ask about this. The word is that $2/watt is reasonable for a combined-cycle plant in a location with complex permitting, etc. And $1 or so a watt is reasonable for a straight gas-fired plant without complex permitting. So the prices aren’t out of line.

  2. moctavio Says:

    I disagree, this is the Revolutionary Government of Venezuela, no permitting necessary, and if you look at the article in CC there has never been a recent plant built at the high price. He really looked into it. None of these are gas fired either.

  3. moctavio Says:

    In any case, I dont even believe these plants have even begun to be designed, as I said, all fluff except Inberdrola and I am sure there is funy business in that one.

  4. Gringo Says:

    The connection between butbutbut’s “complex permitting” resulting in power plants costing $2/watt and Venezuela is “complex mordida.”

  5. marc in calgary Says:

    I think that I’ve already commented regarding this and left a link in regards.
    but here goes again for comparison sake…
    This coal burning thermo-electric plant was built a few years ago here in Canada, at at time when labor costs had increased greatly. Obviously there is a lot of labor in building these plants, especially in the pipe and electrical trades.

    http://www.engineering.ualberta.ca/nav02.cfm?nav02=46651&nav01=18430

    It was built for about $600 million US dollars, providing 450 megawatts, in an area where the average temperature from november – march is below 0 centigrade.
    again, labor costs are much higher here, typically pipefitters/electricians earning in the $40-$50 an hour range for this type of construction. men hired on to pick up garbage or push a broom on this site were being paid + $25 and living on site being provided with food ect…

    as for “complex permitting” what’s up with that? I imagine that it means a lot of greased palms in the government, none of which actually contributes to the task at hand of building something, instead of nothing.
    What’s the problem building something in Venezuela? it isn’t private money building anything, it’s government money… someone else’s money, and there is no accounting for these penny’s from heaven. Clearly the people of Venezuela can build things, just not the government.

  6. Floyd Looney Says:

    If this happened in the private sector investors would flee.

  7. Robert Says:

    A 25K hp gas turbine and generator is almost 2 years from manufacture to delivered, forget engineering and installation. Our recent best quote was 21 months exworks (factory ready). These guys are full of you know what.

  8. antonio Says:

    Robert,

    I think they can buy used and obsolete power plants, only few paint and installed with the price of new ones. That is Revolution way

  9. daniels Says:

    So it is $1 per Watt for the plant, plus $1 per Watt for the “complex permitting”.
    So $1 billion plant implies $1 billion for the “complex permitting”.
    Wow! amazing how costly the “complex permitting” are these days.
    And the “complex permitting” has to be “build” first. And if there is enough money left, then the plant may get build, at least partially.
    Amazing.

  10. Juancho Says:

    Because there is no doubt in my mind that the Iberdrola plant is full of overcharges and commissions, at $2,000 per KW it will be (If it ever gets built) the most expensive thermoelectric power plant in world’s history. (Has it even been started yet?) But there is also no doubt in my mind that Ramirez’ and Rodriguez’ announcements are just that: announcements and nothing concrete has been signed.
    ————-

    The Iberdrola plant is seen by Chavez insiders as a regular cash cow and anyone involved is looting to a degree previously unseen even here in Venezuela. Corruption was of course legion here in Ven. from CAP all the way back. But with past administrations there was at least the appearence of legitimate accounting practices, whereas now, from what friends in EDELCA, EDC and ENELVEN-ENELCO tell me, Chavista “accounting” has virtually no relationship to reality – that is, ALL the accounting is meaningless.

    It has gotten so bad, I am told, that Iberdrola-type projects don’t even exist to meet a national energy need, but only as cash streams for all involved. Here we are arguing about prices and the jefes have no intention of ever finishing such projects. What’s more, I’m also told that the national power grid cannot hold the power it has for much longer, to say nothing of more. And if this isn’t enough, the Iberdrola plan needs a lot of rela stations, high voltage wires strung and all that technical stuff needed to get the energy from the thermalplant to the grid, and that’s not even being figured into the mix yet.

    Basically, the entire business is a game of charades, meanign nothing at all. There will be no power plant. Chavez’ rebolution now exists almost exclusively as a virtual phenomenon, platitudes and promises brayed on Alo Presidente, but meaning nothing at all in the real world.

    JL

  11. Andrew Says:

    Reminds me of another allknowing genious , Causescu of Romania that built a nuclear power station – scheduled in 4 years- in only 16 years ( 1/5 th of the project). He had a good excuse- got shot by masses in year 19 th, after bankrupting the country


  12. […] Venezuela, the country where electric power plants prices can vary by 100% « The Devil’s… […]


  13. Our firm of consultants have been working with a local group ATN to procure four unused G.E. COMBUSTION TURBINES for a proposed plant at Cumana Sucre State which will be built in 12 months and produce over 640 megawatts. Corpoelec and our group will be able to provide the HRSG’s, STEAM turbines and the balance of plant during a second stage of the contract which will provide all the components for a COMBINED CYCLE plant in the following 24 months at a cost of under 1.5 billion USD for 1,000 megawatts from this plant, OR $ 1,500 PER KW.

    The IBERDROLA plant budget includes substation and transmission upgrades therefore the higher $2,000 per KW price. Corpoelec is very competent and we have made alot of progress in the past 6 months dealing with their concerns. The other plants quoted out at $1,000 per KW are simple cycle plants which cost about the same here in the USA.

    Viney@powergen.net


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