Opinion piece by Alek Boyd published in El País undefined – Venezuela is one of the countries with the largest hydrographic resources in the world. The confluence of the Orinoco and Caroní rivers gives Venezuela one of the most powerful orographic basins globally, and the Guri Dam is the third-largest hydroelectric power station in the world. In addition to this, it boasts the most significant oil resources in the Western Hemisphere. Nevertheless, a blackout left the country without electricity on Tuesday. How can such an event be explained?
Natural resources are certainly not lacking in Venezuela, but the abundance of nature is surpassed, and greatly, by the infinite corruption in the governments that have managed the country. Engineer Jose Aguilar, an expert in electrical matters, recently told me that all the arguments made by the administrations of Chávez and Maduro to explain the blackouts and deficiencies in Venezuela’s electrical system are false. Neither El Niño, nor drought, nor rabipelados, and much less sabotage attributed to the opposition—which are never proven—are responsible for the electrical crisis affecting Venezuela.
The root of all this, according to Aguilar, is corruption: in the appointment of ministers, executives, and managers who lack experience and credentials in the electrical area; in contract awards—most often without bidding—to both local and international companies that do not have the technical capacity to execute projects aimed at solving the crisis; and in the corruption that unites appointed officials and contractors to the detriment of the country.
Aguilar has identified 40 projects that should have added 17,513 megawatts of capacity to Venezuela’s national electrical system. If international pricing had been used as a reference, the Venezuelan state should have contracted these works at a cost of $14.657 billion, averaging $837 per kilowatt. However, the actual cost was $23.031 billion, representing an overprice of $8.644 billion, or $1,315 per kilowatt. But the most serious issue is that, of the 17,513 megawatts of additional capacity that the state ordered to be installed since 2003, only 4,360.5 megawatts are available.
The percentage of overpricing varies and has been—needless to say—a constant in the allocation of public works contracts in Venezuela throughout history. According to Aguilar’s estimates, the Guanta Plant was built with a 48% overprice—the lowest of the 40 projects analyzed—while the CORPOELEC Continuous Generation project reflects the highest overprice: 515%.
Derwick Associates, a Venezuelan company that received 12 contracts in 14 months according to investigations by journalist César Batiz, and whose executives are being sued in the United States for illegal association and bribery of high-ranking chavista officials, has raised costs by up to 425% ($2,340 per kilowatt) in some of the assigned projects (San Timoteo).
Another interesting case is the Argentine company IMPSA, connected to the Kirchner couple through businessman Enrique Pescarmona. It received a contract to construct a 2,050 megawatt plant in Tocoma, which should have had a fair price of $3.178 billion, but according to expert Aguilar, has cost $10.371 billion, or $5,059 per kilowatt. Even though the contract was announced in 2007, there has not been a single megawatt available in Tocoma to date. Aguilar added that IMPSA, Derwick Associates, and many of the contracted companies simply lack the technical capacity to carry out the assigned works, often leading them to subcontract. This, combined with corruption and kickbacks, increases project costs.
What is undeniable is that despite the multimillion-dollar expenditure, the Venezuelan government and those profiting from it are far from resolving the electrical crisis affecting Venezuela. And as proof, the blackout yesterday left the country in the dark.