Underinvestment and Corruption Destroyed the Venezuelan Electric Grid

As blackouts wreak havoc on the country once again, it’s hard to remember that Venezuela once had a stable and functional electric system. There’s nothing that decades of underinvestment and rampant corruption can’t destroy.

Photo: Wired retrieved.

Last Tuesday I went to Tabay, the small town near Merida where I’m working as a primary care rural physician because there was a scheduled visit to the local high school. Me and my coworker were supposed to start at 8:00 a.m., but the computers where the kids’ visual acuity and nutritional records were supposed to be registered before going to the regional epidemiology department wouldn’t start. 11 hours earlier, in La Arenosa, Carabobo, a group of electric transformers caught fire and exploded, leaving 12 States, including Merida, without electric service.

This is nothing new. The Venezuelan electric crisis has been an issue since at least 2009, when several-hour-long blackouts became a somewhat common issue. But the barely functional systems collapse harder from time to time: Earlier this year we reported prolonged blackouts across Western states, and just a few weeks ago, Zulia faced the worst chapter of the crisis in its history after high tension wires crossing the Rafael Urdaneta bridge caught fire, leaving some sectors of Maracaibo, Venezuela’s second largest city, without power for up to a hundred hours and with images that seemed taken out from HG Wells’s War of the Worlds.

The Venezuelan electric crisis has been an issue since at least 2009, when several-hour-long blackouts became a somewhat common issue. But the barely functional systems collapse harder from time to time.

In cities, blackouts are bad. They result in traffic jams and closed shops, and after a certain amount of time they produce a complete collapse of daily life: Several sectors, sometimes entire cities get cut off from the rest of the world as cellular networks collapse, as antennas used to have backup batteries for these cases, but most of them have been stolen. In small towns the situation is bleak: In Tabay, if a patient arrives to the ambulatory clinic where I work after sundown and my cellphone’s battery dies, there’s not much I can do in the pitch black emergency room. Heck, I may not even realize there’s a patient because the doorbell won’t ring!

Prolonged blackouts can also be catastrophic for many families, not only because they damage impossible-to-afford home appliances, but also because after several hours without energy to power refrigerators, food spoils, and in a place where meat and chicken have become luxuries, that’s tragic.

People do their best to prepare, after years facing the crisis, many families and store-owners have acquired external batteries, power banks and gasoline power generators that provide light and energy for computers and cash registers for a couple hours. But no one can really prepare for the collapse of a nation’s electric system.

A collapse that sharply contrasts the Venezuelan historical experience with electric energy.

Back in 1888, Maracaibo, epicenter of the current crisis, became the first city in the country, and second in Latin America, to have a regular electric light service, all thanks to the recently created Maracaibo Electric Light Company. A few years later, in 1897 the Encantado hydroelectric station was built in El Hatillo. With a generation capacity of 400 Kw, the station (the first of its kind in Latin America) provided a continuous flow of electricity to the city of Caracas. By 1947, several companies provided Venezuela with some 174,000 Kw of generation capacity, half of which was consumed by Caracas alone. By 1969 the Venezuelan State had nationalized part of the electric industry in the country through the Corporación Venezolana de Fomento (CVF), and inaugurated the first stage of the Guri Dam, part of the Simón Bolívar Hydroelectric Complex on the Caroni River. In 1986, when the final stage of the project was completed, Guri reached a generation capacity of 10,000 Mw, by that time the highest in the world.

The electric system suddenly became absolutely dependant on a government unwilling to invest in its future. And 11 years later, we see the consequences.

But the industry soon started to suffer the consequences of ill-designed policies. The regulation of electricity sale prices by the government since the late 60s limited the capacity of the industry to grow without the push from massive public investments during the 70s and 80s, and by that time State-owned companies already controlled about 85% of the generation and 65% of the distribution of electricity in Venezuela.

The Venezuelan electric system became extremely dependant on public funding and the situation worsened after a failed privatization attempt in the 90s in the hands of Carlos Andrés Pérez. Still, by that time, at least six private companies coexisted with those owned by the State.

By 1999 the per capita consumption of electricity in Venezuela reached 2,500 Kw/h/person, but underinvestment limited the electric system to keep growing, setting the bases for the crisis we live today.

Initially, even Hugo Chávez saw this problem, and in the Electric Service Law of 1999, approved by his government, the need to increase private inversion in the sector was noted. He quickly forgot about this, though, as he began the centralization campaign that ended with the nationalization and merging of every single electric company in the now infamous behemoth, Corporación Eléctrica Nacional (CORPOELEC), in 2007. The electric system suddenly became absolutely dependant on a government unwilling to invest in its future.

And 11 years later, we see the consequences.

But underinvestment and centralization are not the only culprits. According to some sources, over USD 50 billion have been invested in the electric system in the last 12 years, but the results are nowhere to be seen, just like the hydroelectric plant that Odebrecht was supposed to build in Bolívar. On the contrary, the 130 properties, valued in USD 72 million recently seized by the Spanish Police from Nervis Villalobos, vice-minister of Energy and Mines during Chávez’s government, are there for the world to see.


The government has accused literally everyone, from iguanas and roasted rats, to El Niño, for provoking the electric crisis, but truth is that high tension wires don’t burn and transformers don’t explode because of terrorism by nature. These accidents are the consequence of decades of underinvestment and widespread corruption, recently aggravated by an economic crisis that has forced about 82% of electric industry workers out of the country.

The result is that today, Venezuela generates less electricity than it consumes and that deficit is the reason why blackouts are (and will keep being) the norm in the foreseeable future.

That Tuesday at the school, we began the activity at 10:00 a.m., after we convinced the teacher in charge to write down the records on paper. A couple minutes before we checked the last group of kids, the power returned. Everyone was happy, professors and kids ran to charge their cellphones on the few available plugs across the long hallway, they knew it was just matter of time before another blackout striked… And who knows when will power return then?

Juan Carlos Gabaldón

Medical doctor from Merida, currently studying Medical Parasitology at the London School of Hygiene and Tropical Medicine