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Blackout: Venezuela suffers power shortages - International Law Office

International Law Office

Energy & Natural Resources - Venezuela

Blackout: Venezuela suffers power shortages

February 15 2010

Scope of measures
Economic impact

The Venezuelan government has announced that the national interconnected power system is beyond its capacity and certain measures must be imposed in order to reduce power use.

Scope of measures

The Ministry of the Popular Power for Electric Energy has issued the following resolutions for the reduction of electricity use, which were published in the Official Gazette on December 21 2009.

Corpoelec and its affiliates (all electricity companies) will require all users that have a demand of more than 5 megawatts (MW) (for heavy industries) and 2MW (for light industries, malls, commercial establishments and residential centres) to prepare electricity savings plans that provide for a reduction of at least 20% in comparison with the consumption for the same month of the preceding year. These plans were required to be presented within 30 days of the resolution's publication (ie, by January 21 2010). Failure to comply with the obligations established in the resolution will result in an additional charge of 20% on the invoice of the month corresponding to the first infraction and an additional 10% for any further infraction.

The use of incandescent or halogen lamps and light bulbs in advertisements has been prohibited. They must now be substituted with energy-saving lamps and bulbs. Advertisements may be lit between 6:00pm and 12:00am only. Entities whose consumption is equal to or greater than 2MW may use exterior illumination only if it is strictly necessary. Further, they must have shutting-down mechanisms and they may not use interior advertising lighting during non-working hours.

Opening hours have also been regulated: malls may be open between 11:00am and 9:00pm only and casinos and bingo clubs may be open between 6:00pm and 12:00am only. This resolution was later modified and now regulates only stores; it excludes restaurants, cinemas and health centres located within malls.

In addition, the government has reduced the working hours of certain public offices, which will now work from 8:00am until 1:00pm. This temporary measure excludes essential services such as health, security and transport.

Finally, the government has scheduled electricity cuts throughout the country. The cuts scheduled for Caracas lasted only 24 hours before being suspended due to the resulting chaos. Scheduled cuts in the rest of the country are ongoing, with huge associated costs for companies and individuals.

On February 8 2010 the government issued a special decree which declared the Venezuelan power system to be in a state of emergency and authorized the Ministry of the Popular Power for Electric Energy to issue special measures for a period of 60 days to ensure the proper function of the power system. The decree is vague with respect to what the possible measures will be, but it specifically:

  • instructs Corpoelec to accelerate all works necessary to enable the national interconnected power system to increase its capacity, including direct awards to contractors under the Public Contracting Law;
  • allows Corpoelec to purchase energy from both local and foreign independent generators;
  • instructs administrative entities, the police and judicial authorities to support the elimination of unauthorized connections to the national interconnected system and the regularization of such connections; and
  • orders the creation of an auto-generation registry to determine independent generation capacity.

On February 11 2010 Corpoelec issued a resolution regulating the 20% reduction of power used by industrial and commercial establishments and official and residential users in Caracas. Failure to comply with these provisions may result in fines (ranging from 75% to 200% of the monthly power bill) or the suspension of the power service.

Economic impact

Companies have been trying to comply with the 20% power reduction by reducing working hours, shifts and the use of certain equipment to the required minimum.

Outside Caracas, the impact is more significant as daily cuts of up to three hours are seriously affecting the activities of industrial and commercial establishments, which must buy generators and other back-up equipment to offset the daily power cuts.

For further information on this topic please contact
Vera de Gyarfas at Travieso Evans Arria Rengel & Paz by telephone (+58 212 918 3333), fax (+58 212 918 3334) or email (vbg@traviesoevans.com).

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