2013-09-22 09:06:06 - New Energy market report from Business Monitor International: "Venezuela Power Report Q4 2013"
Despite a small number of power projects coming online over the past year, resulting in a relatively robust growth in net capacity for 2012 (particularly in terms of thermal capacity), Venezuela is still significantly underperforming its regional peers. The country's business environment is notably unattractive, with high levels of corruption, an opaque tendering process and extremely low levels of liberalisation within the power market. Furthermore, electricity output from successfully commissioned plants is at the mercy of Venezuela's aging and inefficient T&D infrastructure - with power outages still a pressing concern for the majority of the population.
Full Report Details at
Over the past year, Venezuela's power market has swelled in terms of capacity. For instance, according to a report
from Bnamericas, 1.07GW have been brought online since energy minister Jesse Chacon announced the short-term plan at the beginning of May 2013, after President Nicolas Maduro declared a state of emergency for the power sector for 90 days in April
This notwithstanding, our grim outlook for the Venezuelan power sector remains in place. In order to meet demand, which averages between 17GW and 18GW, Venezuela has an installed capacity of approximately 28GW; however, only 20GW are currently operational. Yet, the country's business environment continues to present sizeable risks to investment (both industry and country specific). Under Chavez, private enterprise was asphyxiated and rigidly controlled tariff rates led to a lack of capital for investment in sufficient capacity, and in spite of repeated promises by the government, delays and problems with funding continue to represent an obstacle to capacity development and improvements to the transmission and distribution (T&D) system in Venezuela.
In light of this, we note that:
* Venezuelan Electricity Minister, Jesse Chacon announced in June 2013 that diesel-fuelled capacity will be boosted significantly over 2013, with roughly 1.2GW of capacity added by the end of the year. With the country continually suffering from blackouts, stemming from inadequate hydropower output (primarily as a result of drought) and inefficiencies within the power network, the move is aimed at stabilising power supply within the country. However, prolonged reliance on diesel-fired capacity could hinder oil export revenues.
* Macroeconomic and political risk factors continue to weigh heavily on the sector. BMI's Country Risk analysts expect near-recessionary economic conditions to prevail over the coming quarters, characterised by a slowdown in private consumption and exports. Additionally, they believe recently-elected President Nicolas Maduro will struggle to exert his grip on power in a highly polarised political landscape. A cocktail far from conducive for significant long-term investments.
* That said, there could be some brighter spots on the horizon. Firstly, there is always the chance that in an effort to ease social tensions and maintain popularity Maduro may commit to social spending - creating upside for the power sector. In addition, we highlight that US manufacturing giant GE is reportedly in talks with the government over a planned expansion of a wind farm in the far west of the country, creating some modest upside for the renewable sector. The scheme currently features 25MW of hardware from Argentine supplier Impsa who will expand the site to 75MW under an existing contract, it is understood.
Report Table of Contents:
BMI Industry View
- Venezuela Snapshot
- Table: Country Snapshot: Economic and Demographic Data
- Table: Country Snapshot: Power Sector
- Venezuela Power Forecast Scenario
- Electricity Generation And Power Generating Capacity
- Table: Venezuela Total Electricity Generation Data And Forecasts, 2011-2016
- Table: Venezuela Total Electricity Generation Long-Term Forecasts, 2017-2022
- Table: Venezuela Electricity Generating Capacity Data And Forecasts, 2011-2016
- Table: Venezuela Electricity Generating Capacity Long-Term Forecasts, 2017-2022
- Electricity Consumption
- Table: Venezuela Total Electricity Consumption Data And Forecasts, 2011-2016
- Table: Venezuela Total Electricity Consumption Long-Term Forecasts, 2017-2022
- Transmission & Distribution, Imports & Exports
- Table: Venezuela Electric Power Transmission And Distribution Losses Data And Forecasts, 2011-2016
- Table: Venezuela Electric Power Transmission And Distribution Losses Long-Term Forecasts, 2017-2022
- Table: Venezuela Trade Data And Forecasts, 2011-2016
- Table: Venezuela Trade Long-Term Forecasts, 2017-2022
Industry Risk/Reward Ratings
- Latin America Power Risk/Reward Ratings
- Table: Latin America Power Risk/Reward Ratings (Scores Out Of 100)
- Venezuela Power Risk/Reward Ratings
- Venezuela Risk/Reward Ratings
- Key Policies And Market Structure
- Regulation and Competition
- Venezuela Power Projects Database
- Table: Major Projects - Power
- Latin America Regional Overview
- Table: Glossary Of Terms
- Methodology And Sources
- Industry Forecasts
- Power Industry - Data Methodology
- Generation and Consumption Data
- Electricity Generating Capacity Data
- Power Risk/Reward Ratings Methodology
- Table: Power Risk/Reward Indicators
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