Monday, January 4, 2010

Venezuela begins 2010 with electricity rationing

Oil-rich Venezuela ushered in 2010 with new measures rationing electricity use in malls, businesses and billboards, as Hugo Chavez's government aimed to save power amid a crippling drought.

The new regulations came into effect January 1, with businesses required to comply with reduced consumption limits and authorities warning of forced power cuts and rate hikes if the measures are not followed.

A decree published on Christmas Eve states that commercial centers may operate from 11:00 am to 9:00 pm on the electricity grid, but beyond that establishments would have to operate off-grid, using their own generators.

Venezuela is flush with oil -- the country's primary export -- and natural gas, but relies mainly on hydroelectric generation to meet domestic energy demand.

With the country in a widespread drought, late last year Chavez announced a sweeping campaign to reduce widespread energy "waste," stressing that rationing was necessary to avoid a systemic "collapse."

Shopping centers in Caracas Saturday opened at the appointed new hour, although industry representatives called for extending the time frame, arguing that night-time energy consumption is less than 10 percent of the total.

The power crunch is expected to have an impact on a wide variety of businesses, including cinemas, casinos and bingo halls.

Establishments failing to comply with the measures could face outages for a period of 24 hours, and up to 72-hour suspensions "in case of recidivism," according to the decree.

The regulation also orders businesses to institute savings plans aimed at shedding consumption by at least 20 percent, a measure that will be evaluated monthly by the newly-created ministry of electricity.

Tariff surcharges of up to 20 percent could be imposed on violators.

Rationing is also to apply to lighted advertisements.

Introductory measures were evident in Caracas last month, with the neon signs that traditionally welcome Christmas left unlit.

The state-controlled aluminum and steel industries halted some of their production lines in order to reduce energy consumption by some 560 megawatts (MW).

Electricity demand in Venezuela is more than 16,500 MW, far higher than what is currently generated. Experts say the power sector requires 18 billion dollars in investment through 2014.

In 2009 there were four nationwide blackouts, with daily failures common in several cities.

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