Venezuela Opens Electricity Sector to Private Capital

Passed unanimously by the National Assembly on Tuesday, the law lets oil producers build power plants for their own fields without state approval if they do not connect to the national grid. Other private generators need a concession from the Ministry of Electric Energy for plants above 50 megawatts. Assembly president Jorge Rodríguez, brother of interim President Delcy Rodríguez, said the generators would mainly serve large consumers. The government has not published their tariffs.

Households unable to pay full prices will remain on the subsidized state grid. Experts estimate it produces about 12,000 megawatts, against demand of 16,400 MW in September. A repair agreement with GE Vernova and Argentina’s Impsa is among the government’s options for increasing supply, but Caracas has not guaranteed payment to the suppliers. Interim President Delcy Rodríguez said on October 8 that the agreements would add 7,400 MW, with another 600 MW expected from unit 6 of the Planta Centro station in partnership with China.

The changes come as power failures constrain oil production and exports. Venezuela’s exports remained near 1.25 million barrels per day through the summer, amid aging terminals, crude-quality problems and grid failures; tankers waited as long as 30 days to load. Repsol, a 40% partner with PDVSA in the Petroquiriquire venture on Lake Maracaibo, had sought its own power plants and supplies by May, Reuters reported. Power expert Miguel Lara told Reuters then that he did not know “which power supply will support the economic reactivation they are talking about.”

The law also permits private and mixed-ownership companies to generate, transmit, distribute and sell electricity through joint ventures lasting up to 25 years. A new superintendency will oversee tariffs, service and self-generation. Guarantees for private participants are included, but their terms have not been published. Lara estimates stabilizing the grid would cost at least $15 billion over three years. Suppliers have raised concerns about payment: “They still have no clue on how we would get paid,” an equipment supplier executive told Reuters.

Power shortages are already disrupting daily life and industry. Residents in Zulia, Mérida, Aragua, Guárico and Portuguesa blocked roads and burned tires in September. People in Maracay described outages of up to 16 hours a day. Conindustria, an industry association, said factories averaged 214 hours without power out of 488 working hours between April and June; plants in Zulia lost 333 hours.