The P Word

When is the opposition going to get over the taboo that surrounds the obvious need to privatize underperforming state-owned utilities?

If you’re in Venezuela this Holy Week, chances are you will either suffer a blackout, or you will turn on the water and see nothing come out. It’s pretty likely you will have to suffer both stations of this via crucis.

The most disheartening part? You will probably fail to hear a single person utter a sensible solution to this mess.

The other day, my relatives in Maracaibo, exasperated as nearly everyone else, were telling me that water service in Venezuela’s second city is being rationed to once every ten days. The previous night they had suffered a blackout – and there are no blackouts quite like Maracaibo’s 28-degree-celsius-at-three-in-the-morning-with-no-breeze blackouts.

Everything, it seems, keeps getting worse.

People have not yet made the connection between the government’s complete domination of the utilities sector and their irretrievable breakdown.

The weird thing is that nobody talks about the obvious solution to the problem. It seems as though it’s forbidden to say that the only way we will get out of this conundrum is by privatizing both services – partially, or wholly.

Venezuela’s problems are not caused by drought – they are caused by under-investment. And what causes under-investment?

Well, corruption and inefficiency, of course, but that’s just what’s on the surface. The underlying problem is that the bureaucracy is broke. It is hard to knock a government currently facing a ginormous budget deficit and sky-high interest rates for simply not investing in power plants or water treatment facilities. These people simply have other priorities…and will continue to have other priorities, forever and a day. 

Inevitably, we will have to call the private sector in. Isn’t it high time we start laying the groundwork for this by … telling people we will have to call the private sector in?

One of the many challenges of reforming our utilities is going to be convincing people that these moves, which will undoubtedly involve raising the price of utilities, are good for the nation. People have not yet made the connection between the government’s complete domination of the utilities sector and their irretrievable breakdown.

And that’s because nobody in our public sphere is linking the dots for them.

Take, for example, today’s interview with intellectual heavyweight Arnoldo José Gabaldòn, published by Prodavinci. Gabaldón, in talking about the many crises facing the country, refuses to say the obvious: state ownership of things the state has no business owning is the problem.

Instead, he talks vaguely about inefficiency, about corruption, and about the olden days, when the Venezuelan government was able to do things a bit better. He does not mention the private sector. Gabaldòn seems to be stuck in this time warp that Ramos Allup sort of believes in – that governments such as Betancourt’s can materialize and solve people’s problems.

Gabaldón is entitled to believe the Venezuelan government, led by somebody else, can do better. He is clearly wrong.

It is a fact that in Venezuela’s current incentive scheme, the government has a thousand other things it needs to invest money in before spending considerable amounts on electricity and water. 

We may not like it, but it’s the truth: without the private sector – not you, Derwick – we will quickly have to start making up our own excuses for Venezuela’s continuing utilities crises. And we will quickly run out of them. Ultimately, when we are forced to call on private firms to fix our utilities sector, what will we tell the voters?

Venezuela’s problems are political, but they are also technical. Our electricity and water crises are technical issues having to do with inefficiencies in supply and screwed-up relative prices that cause havoc on demand. The only way out is by calling on private companies to help sort this mess out.

Letting the market into our utilities sector is no longer a matter of choice, or ideology. Ignoring this issue now…will only cause us massive problems in the future.