September 30, 2004
Venezuela flush with energy
By Silene Ramírez
(Reuters) - "Already enjoying an oil income bonanza, Venezuela has ramped up its electricity generation by 6.2 percent in 12 months and this will help ward off any threat of a domestic energy crisis in the coming years, a top industry official said.

Last year, the world's No. 5 oil exporter faced potential power shortages when water levels at its massive 9,025 megawatt (MW) capacity Guri hydroelectricity dam in southeast Venezuela reached record lows because of a three-year drought.

Daniel Machado, president of state power generator CVG-Edelca, said abundant rains this year had restored water levels to close to the maximum at Guri, the second biggest hydroelectric facility in the world. The largest is at Itaipu, Brazil.

This had boosted output by the power company, owned by state industrial holding Corporación Venezolana de Guayana (CVG), which generates 72 percent of Venezuela's electrical energy needs from its multiple hydro-power projects on the lower Caroni river in southeast Bolívar state. Most of the rest is produced by state and private thermo-electric plants.

Venezuela's accumulated electricity output rose over the 12 months through August this year to 93,926 gigawatt hours (GWh) -- the highest level in the last five years -- from 88,439 GWh in the same 2003 period, according to industry figures.

'If the rains and the water levels in Guri stay the same next year and in 2006, we won't have any problems from the energy point of view. There won't be any likelihood of rationing,' Machado said in an interview.

He added this would allow the Venezuelan power industry to respond to an increase of nearly 8 percent in electricity demand so far this year which reflected the strong recovery of the oil-reliant economy from a two-year recession.

Political conflict over President Hugo Chávez's rule and a crippling oil strike triggered sharp economic contractions of 8.9 percent and 7.6 percent in 2002 and 2003.

But with high world oil prices now swelling Venezuela's state coffers, the government forecasts growth of between 10 and 12 percent this year and of at least 4.5 percent in 2005.

'We expect (electricity) demand to increase in 2005,' said Machado, whose company supplies energy to Venezuela's aluminum and steel industries in Bolivar state. CVG-Edelca also exports electricity to northern Brazil.

More power projects
Besides its Guri and Macagua plants on the Caroni, CVG-Edelca is also developing two more big hydroelectricity projects -- Caruachi and Tocoma -- which will raise its total generating capacity to a projected 17,670 MW in 2014.

The $2.6 billion, 2,250 MW Caruachi plant already has eight of its 12 generating units running and the rest will be brought on line in the first quarter of 2006, Machado said.

Construction of the $3 billion, 2,280 MW Tocoma plant was underway and it was expected to be fully operational in 2014.

'When we finish Tocoma and all these facilities are installed on the lower Caroni, we'll be saving the equivalent of 500,000 barrels of oil per day,' Machado said.

Venezuela was receiving financing for the Caruachi and Tocoma projects from the Inter-American Development Bank and the Andean Development Corporation, the financing arm of the Andean Community of nations, he added.

CVG-Edelca was also working to expand the capacity of the giant 30-year-old Guri facility to 10,000 MW".