On Tuesday, Venezuela reduced the workday of public sector employees to five and a half hours to save on air conditioning costs. The move comes as part of a nationwide electricity rationing plan, necessitated by a surge in power usage brought on by particularly hot weather. “Within a week, power demand has risen 1,500 megawatts,” said the electricity minister, Jesse Chacón, on state TV. With demand at 18,000 megawatts, “the system begins to have stability problems,” he added.
Granted, it gets hot in Venezuela — peak temperatures have risen to 34C (93F) in Caracas and 37C (99F) in Maracaibo. But this is hardly a surprise for the tropical country. The real story is that years of mismanagement and under-investment in the electricity sector (especially following its nationalization in 2007 by Hugo Chávez) made blackouts frequent, even as the costs of wastefully running air conditioners were kept very low by big government subsidies. The average annual consumption per Venezuelan household is 5,878 kilowatt-hours, double the average of the region.
On Tuesday, Vice President Jorge Arreaza said private companies would be asked to use their own generators, to reduce pressure on the national grid. He pointed out that private homeowners consume the most energy, and he called for everyone to turn the dial down on their air conditioners: “We are appealing to everyone’s conscience, to use energy efficiently.”
The government has previously blamed energy shortages on maintenance and sabotage, which conveniently absolves it of blame. By whole-heartedly continuing Chávez’s socialist revolution, President Nicolás Maduro’s regime is trapped by its own populist rhetoric — which prevents it from reducing these problematic subsidies.
Meanwhile, Venezuela is suffering a severe economic crisis, due in large part to the collapse in the price of oil, which provides 96% of its export revenues. As inflation skyrockets (it was close to 70% last year), the country’s economy is shrinking — IMF economist Alejandro Werner predicted a 7% contraction this year. Just to make the bond payments needed to scrape by as its reserves dwindle, the country is cutting down permitted imports and implementing new capital controls in its convoluted multiple-currency system. Shortages of basic goods are widespread, and the government is struggling to contain growing discontent among the population.
In this fragile situation, the government cannot afford to invest in upgrading the grid or expanding capacity. In any case, even if it could be done effectively — meaning without corruption, an extremely unlikely proposition — it would take years to see results.
Maduro will announce economic reform measures this Friday. More heavy-handed government restrictions are expected, since he reiterated on Tuesday that he intends to “win the economic war along the path of socialism.” (In his State of the Union speech in January, he attempted to reassure his countrymen that “God will provide,” which provoked much ridicule domestically and abroad. )
Unfortunately, blackouts and electricity rationing look to be the new norm with no end in sight.