Tuesday, October 20, 2009

Chavismo is shorting big time over lack of juice

Still immersed in electoral calculations I need to comment on that fascinating episode of chavismo history, the month when the electric crisis came back to zap them in the ass. The press is all full of technical reports about how that problem arose and whose guilt is. There is much less consensus about finding a solution since any will be, well, painful. Or we can look at the whole episode as yet another morality tale.

The cold naked facts first

Chavez has been in office for soon 11 years. That is, he has been already in office for more than TWICE the rule of any of his democratically elected predecessors. No one remembers his predecessors for constant power outages and damages TV, refrigerators, and other appliances....

Part of the distribution grid and of the production system where privately owned, though the state was the main player. Chavez decided to nationalize it all, flush of his 2006 victory.

With ups and downs, the Venezuelan economy did not grow that much in production, even retreating in many items, but it clearly grew a lot in import, distribution and expensive A.C. malls for shopping.

Experts seem to agree that electrical consumption grew by about 25% over the last decade while production only grew by about 10%. Give or take a couple of points it does not matter, there is a big deficit, period. And nothing was ever done to solve it.

The government has known for at least 5 years that massive investments in electricity distribution were necessary, that oil/gas burning had to increase significantly, and that we were too much at the mercy of an El Niño cycle to dry out the Guri system water reserve of which maybe 70% of our juice depends.

What has the government done? It finished the Caruachi dam, which was started BEFORE Chavez came to power. Chavez himself promised 29 generating plants a few years ago. Work has started on 5, only two of them producing so far, but at a partial rate.

That is all. Only today we learned that in a rush the IBD had approved a credit for a new dam, that should work in a couple of years. Yeah, right.....

Why the fiasco?

The reason for the looming disaster upon us is, I am afraid, more than ever, that those who rule over us, starting with economy minister Giordani in office for about 9 years already, have no fucking idea how a modern economy is run. They have their head simply filled with ideological nonsense and think that with power in hand they will force things to work the way they think they should work. It is that simple. Reality for them is a distraction.

If you prefer a more pragmatical explanation I could advance the overreach of populism, where the need to promise new things all the time, to give free stuff all the time simply eliminates investments in all that is not visible, immediate, quick fixes. Fixing electrical system is not glamorous, people do not see it and in chavismo sick mind the hoi polloi will not be thankful for a good electrical service anyway.

Though of course these explanations, far from being exclusive, work well together.

Electrical shorts not only at home but in the brains of chavismo

The consequences are becoming dramatic. At work we lose now at least a day of work a month, and Yaracuy is one of the less hit areas, so far. But elsewhere reports of daily outages lasting up to 12 hours are now routine. You can decide for yourself how the quality of life is affected, in particular for the poor without AC, and a small cheap refrigerator that cannot hold the cold for that long.

What is much more interesting is to listen to the reactions of chavismo, showing that they are very annoyed by this trivial matter for them. In their words there is really no much concern for the people, just a wish to talk about something else, the revolution, the hated US and whatever. That people want to have cold drinks and TV to watch their soaps does not seem to enter in their minds. A few examples below.

Giordani, the economy minister, the guy who has presided over two major devaluations of the Venezuelan currency, who has never been fired due to some mystical hold he must have on Chavez had no other explanation but to blame the "preceding administration". This is simply stunning since himself represents a length of time in office almost equal to two of these preceding administrations. HE IS his own preceding administration! What has he been doing all of these years? No, in his attitude what you read is the second rate academic, trained in Italian universities at the time where communism was seen as the answer to all, a guy of such arrogance that he thinks his longevity in office is actually his ultimate validation and that he has no accounting to give to anyone. Read his recent interview where he clearly has no idea as to why the Venezuelan economy is slowing down, anyone's fault but his policies.

Henrique Maestre, the governor of Sucre. This individual is one of the scummiest characters offered by chavismo. He comes across as the barrio thug, and has been acting like that all of his so called political life. He is an animal and in his excuses for the electricity outages he comes across as such, totally ignorant of economics, even of its simplest elements. See, he justified the electric outages because Chavez had to chose between financing Barrio Adentro or electricity for the country. First, he is comparing apples and oranges. But much, much worse, he confesses that the social programs of chavismo were established WITHOUT ANY CONSIDERATION AS TO THEIR LONG TERM SUSTAINABILITY. I am not even discussing if the people and the means existed, I am here observing coldly that chavismo set up Barrio Adentro as an electoral propaganda ploy never worrying about its long time chances or effectiveness. No wonder more than 2000 of the Barrio Adentro modules have closed! And note: they closed before the electrical situation became catastrophic so in a way the excuse of Maestre is not even a good tall tale of Chavez generosity!!! By the way, what good is a Barrio Adentro module if it is out of juice?

There are other examples but let's finish this post with El Supremo himself. Clearly the man never believed that the electric crisis would come. He sounds totally surprised and is bereft of any idea how to face it. He has had at least 4 years to start doing stuff to prevent it or at least attenuate the effect. But he has not done so because he had to win elections, he had to give away food and aspirin, he had to give away refrigerators and washing machines in barrios lacking running water or stable electricity, he had to build the ALBA against the US of A, he had to finance Cuba with more money than even the Soviets gave in their heyday. A man of his stature could not be bothered with such mundaneness. But he never had the wisdom to name someone to fix the problem and let him or her work at it, even on a budget.

So, as is expected in such situation where bureaucrats are trapped by their own inefficacy and lack of prevision, he comes up with silly measures that make little sense ad that are not going to solve the problem whatsoever.

First he ordered a campaign to educate people in saving energy. If we judge on the results of previous campaigns launched by Chavez we know the fate of this new one. Can any one name for me a successful educational campaign involving health or social services launched by Chavez? Must I remind you of the street kids fiasco? Must I remind you that he NEVER launched a campaign or judicial measures against fathers abandoning wife and kids? None of his initiatives to make sure people do not throw trash in the street has worked, not even a single fucking day! The only one that I can think of with a very limited success is to limit road alcohol consumption on certain holidays. And he pretends now to educate us as how to save electricity? Even his light bulb changing campaign has gone nowhere because when the energy efficient bulbs eventually burn down people go back to the old incandescent bulbs, much cheaper than the ones that were originally given by the government for free.

Then he decides that the rich should pay more for their electric bill, because they have all those A.C at home and two refrigerators and wide screen TV and whatever nonsense crosses his neurones at such moments. First, he can double my electric bill and it will not affect me because electricity is dirt cheap in Venezuela. I have an electric kitchen! And a water heater! And yet I rarely pay more than 50Bs. for a month service! Less than what I paid years ago in the US in Spring where I used neither AC nor heat! Trust me on that one, he can double electric fare for the rich, the savings will be minimum. Amen of the fact that the people that are heavy consumers at home are no more than a very few percentage points (maybe 5?).

But Chavez will never take the measures that are really needed because they would go against all the cheap populism he has established in 11 years. For example, by minister Ramirez own admission, he can start by forcing the government to pay the huge electrical bill it owes!!!! Yes, that is right, the utilities biggest dead beats in Venezuela is the government because no electric company can cut service if they do not pay! The less now that they all belong to the state... Of course that would mean that ministries and other offices would have to cut down on such things as campaign support, red t-shirt distributions and other such things to pay for their juice!

Another area where true saving could happen is to force the immense barrios of Venezuela to stop stealing electricity. They should be forced to pay at least a cheap flat rate. Why? Because if you travel anywhere in Venezuela you will be astounded at the intricacy of the electrical cables floating above your heads. That is, it is estimated that anywhere between 20 to 40% of electricity in Venezuela is simply stolen. And that robbery is highly inefficient of course. By simply offering a cheap but monitored service Chavez could reduce more the waste than increasing the electricity bill of the rich. However forcing people to pay for electricity would have the same political cost for the government as doubling the ridiculous price of gas which has not changed in 11 years in spite of an accumulated inflation that floats around 600%.

On the other hand the measures Chavez might take will eventually be a rationing of electricity, on a "provisional" excuse due to El Niño failing to water adequately this year the Caroni water head. This would become permanent sooner than later, at a tremendous cost for the development of the country. I mean, how can you build an economy, socialist or not, if you have electrical rationing and the lousy service wrecks regularly your electrical motors? Amen of increasing the electric bill of companies already burdened with the highest working costs of Latin America.

In other words, prepare for next year electricity induced recession. And if Chavez indeed opens a dozen electrical plants next year (one can always dream) he will be exporting less oil, adding to the recession. Go and buy a home generator if you can afford it. The electrical problem is going to last as long as Chavez is president. He is unable to solve it.

By the way, what good it is for the defense of Venezuela to buy all those second rate Russian weaponry if we have no electricity? Has any of the fat and corrupt generals surrounding Chavez pointed out to him that a couple of cruise missiles at a couple of electric distribution centers are enough to stop Venezuela? Remember, 70% of our electricity comes from a single area... Stopping buying weapons and instead buy 30 generating plants would increase Venezuela security way more than a half dozen semi obsolete Sukhois.

-The end-

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