Electric Crisis

Photo of the Guri Hydroelectric Plant posted by the US Embassy on August 3

In the last few days, a sight that had become unusual in Venezuela for years took place in multiple parts of the country: street protests over electricity. The blackouts are increasing in frequency and duration without any warning, along with several strong brownouts. This recent uptick has even reached the capital, which the chavista government usually tries to protect from the chronic power deficit, at the expense of the rest of the nation.

In Carabobo state, people in Valencia and its surrounding cities reported both prolonged cuts and swift interruptions, which have taken their toll on their daily routine. Local authorities say that the full recovery of the thermoelectric plant Termocarabobo (directly affected by the earthquakes just like Planta Centro, close to the epicenter of the first quake) will help alleviate the problem.

Next door, in Aragua state, things are not much better. People in Maracay report daily double cuts of four to five hours, hitting the city’s commercial sector despite the use of power plants. In the smaller towns of Villa de Cura and San Mateo, citizens held peaceful protests to complain as governor Joana Sánchez blamed current electricity woes on the June 24 earthquakes.

The increase in power outages has reached both the east and west of Venezuela. In the western Lara state, an unannounced blackout right after midnight on July 31 left large parts of the state in the dark, in addition to the lengthy daily rationing that reaches up to five hours. Local NGO Activos por la Luz, which monitors the effects of the electric crisis in the region, released in response a very scathing statement on social media:

Protests spanning affluent Lechería and impoverished El Callao spell bad news for Delcy Rodríguez’s promise of economic recovery. 

“This has stopped being just an electrical problem. This is a systematic destruction of our mental health, our emotional stability, of our dignity and of our hope as people. It’s not normal to live under constant stress, without knowing when the power goes out, how long the blackout will last or how you will go to sleep, work or just survive the heat and the burnout. We have been pushed to a permanent state of anxiety, frustration and impotence…”

Very bad mood in Oriente

Meanwhile in the eastern cities of Maturín and Anaco, people made their voices heard in front of the offices of State-owned electricity Corpoelec without incident. Sadly, that wasn’t the case in Guayana, as a public gathering in the road to enter the town of Guasipati on July 28^th was dissolved by a group of unidentified men using firearms. The following day, the nearby town of El Callao witnessed a civic strike protesting six-to-seven hour power cuts and the collapse of other public services caused by increasing mining activity in the area and the growing population influx.

Such is the level of exasperation that the mayor of Lechería, Manuel Ferreira, publicly called Corpoelec to establish a proper scheduling of the electrical cuts. “Without schedules, without timetables and without respect: that’s how our neighbors have been treated. We understand the climate variables or the structural system failures, but if the rationing is unavoidable, the least we demand is respect and dignity. People have the right to know when the service is taken off so they can prepare.”

To better understand the relevance of this: both Guasipati and El Callao belong to the region covered by the Mining Arc, where there is a documented presence of gangs (hence the recent killing of Tren de Aragua’s leader in nearby Kilometro 88), and the military is currently deploying intense control over the population. The gold industry in the region is vital for the regime’s interests and has recently fallen under the eye of the Trump administration and the international mining companies the White House aspires to attract to Venezuela. Lechería remains an enclave for the privileged, the ones who built or preserved a comfortable life during the worst years of the country’s economic decline. The fact that both regions are witnessing protests of this scale is more bad news for Delcy Rodríguez’s promise of economic recovery. 

The electric transition hasn’t started either

Back in May, as the national power grid was stretching thin because of high temperatures and rising demand, the Electricity Minister Ronald Alcalá and the US Chief of Mission John Barrett met to discuss plans to rebuild the country’s power grid.

In the early days of June, the National Assembly apparently advanced in the drafting of a partial reform to the Electric System and Service Organic Law, allowing the private sector to participate in the electricity service but still keeping the State mostly in control of it. Some have criticized the changes as insufficient.

After that, the interim government signed two memorandums of understanding in June. The first one with Argentinian company IMPSA, which involves two hydroelectric plants in Guayana: repairing the Macagua Dam and finishing the long-delayed and unfinished Tocoma Dam. 

IMPSA was formerly a State-owned company which won the contracts in 2008 when Cristina Kirchner was in charge but stalled around 2013-14 as the Maduro government stopped paying.

With the arrival of Javier Millei to La Casa Rosada, IMPSA was privatized and later sold to US consortium Industrial Acquisitions Fund (IAF), which decided to pick up the pending projects in Venezuela again right after the events of January 3rd, with Washington’s help.

The second MoU was with GE Vernova, a major US energy company which was once part of the famous conglomerate General Electric until its breakup in 2024. In the agreement, GE Vernova would assist with improving Venezuelan energy supply to one gigawatt in the first 24 months and more than five gigawatts over the course of four years. The company also committed to properly train personnel and transfer technology to modernize the infrastructure.

The second reading and final passing of the electricity reform is now on hold as the Rodríguez-controlled National Assembly says it is focused on more urgent, disaster-related matters.

Days after those preliminary agreements were announced and signed, the earthquakes occurred and some of the set priorities took a backseat. For example, the grid was heavily hit in places like La Guaira and power had to be restored in parts of Falcón. As mentioned earlier, Carabobo’s generation plants were also affected.

As those short-term fixes are on the top of the list, some of those positive developments from June have gone down on the to-do list, as the CEO of GE Vernova Scott Strazik admitted to Bloomberg: “Practically speaking, if not for the earthquake that had taken place that took us off track, we could be very close to a contract today…” The company is optimistic to start working this year.

In a similar vein, the second reading and final passing of the electricity reform law is now on hold as the Rodríguez-controlled National Assembly says it is focused on more urgent disaster-related matters. But the earthquakes deepened the many issues the national grid had been carrying for long, as this Runrun.es report indicates:

Letters of intent that the government signed with international consortiums to recover turbines in the Caroni (River) or to rehabilitate trunk transmission do not accelerate engineering times. Therefore, specialists insist that stabilizing the system is a complex process that’ll take years.

Until those projects materialize, the interior of the country will keep paying the cost of the system that works to its limits. The seismic doublet of June not only shaken distribution lines of those who usually don’t lose the light; for the rest of Venezuela, the true earthquake is day-by-day in the darkness of a structural crisis that is not solved with speeches.

The official response from Delcy Rodriguez is to simply throw the ball back and ask them to keep carrying that weight as she just announced a brand new plan to save electricity and water. The pretext: the effects of El Niño are being felt around the world and the solar radiation phenomenon that caused the original declaration of electric emergency in March is returning later in August.

For the record, there have been previous precedents of planned power rationing timetables like in 2016, when there was a situation similar to the current one. However, a rationing plan like the one announced for the summer of 2026 is the first in years. Corpoelec chose instead to send SMS messages of questionable accuracy. 

In the meantime, she can at least count on the Trump administration giving her a little help-out, thanks to the visit of John Barrett to Guri, along with experts from the US Energy Department.

When US Energy Secretary Chris Wright visited Venezuela in February, he left Miraflores with an ambitious message. After meeting Delcy Rodríguez in Miraflores, he told reporters: “This year, we can drive a dramatic increase in Venezuelan oil production, in Venezuelan natural gas production and Venezuelan electricity production.”

Three months later, large parts of the country are enduring heavy electricity rationing, with daily cuts lasting between five and eight hours. Even after the government imposed a 45-day electricity-saving plan in late March to cope with high temperatures and surging demand, the situation continues to deteriorate. As the system faces renewed strain, the US Embassy in Caracas publicized a meeting with Ronald Alcalá, Delcy’s new electric energy minister, where US Chief of Mission John Barrett said Washington will “work with the interim authorities to rebuild the power grid.”

“The three-phase plan of President Trump and Secretary Rubio focuses on restoring reliable energy supply through experience, investment, and collaboration with the US,” Barrett’s brief statement read.

Caracas has resorted to nationwide measures like banning cryptocurrency mining, as power consumption recently reached its highest levels in nearly a decade. El Pitazo reported that current nationwide rationing has exceeded those seen in 2012 across much of the country, with Caracas remaining the main exception.

The latest chapter of this long-running crisis arrives at a sensitive moment for the post-Maduro regime. As has been widely reported, Rodríguez is trying to boost some parts of the economy and attract foreign investment into oil, gas and mining. But the country’s electrical system—weakened by decades of underinvestment, mismanagement and institutional collapse—has re-emerged as an obstacle.

For Luisa Palacios, a Venezuelan professor and energy executive that served as CITGO’s chairwoman, the current blackout cycle reveals something deeper than previous ones.

“This new episode should serve as a wake-up call about the urgency of restructuring the country’s electrical system,” she says. “We are witnessing a stress test of the system even under a modest recovery in demand.

One huge challenge is to bring back investment and expertise required, Palacios wrote in February along with Francisco Morandi, an AES Corporation executive who did strategic planning for Electricidad de Caracas. However, some major companies are hesitating to join after meetings with officials last month, Reuters reported. One executive shared his view: “I returned very skeptical from Venezuela (…) The power plants have not been properly repaired in 10 years, so the needs are almost infinite. But they still have no clue on how we would get paid.”

“The electricity sector is a highly capital-intensive sector that requires large investments to be made before a single cent of profit is seen,” Palacios told Caracas Chronicles. “That is why counterparty risk is fundamental in the electricity sector: ensuring that the user pays you, and on time, is essential.”

The most immediate problem is straightforward. Except for Haiti, Venezuela is the only country in the region where power consumption has actually declined over the past decade, according to OLADE, with per capita consumption falling by roughly 30% since 2014. Nevertheless, the country still does not generate enough electricity to meet demand.

Palacios was firm in the idea that it is necessary to move beyond the State’s central role in power generation, which can’t afford the necessary investments, and that the time to do so is now. 

“Without increasing power generation offered significantly by the private sector and improving transmission and distribution, the country won’t recover from the structural electric crisis that today remains the main bottleneck in terms of infrastructure”.

One of the central proposals advanced by Palacios and other energy experts is to restore thermal generation using Venezuela’s own natural gas resources. Large volumes of gas currently burned or flared during oil production could instead feed thermal plants and combined-cycle gas turbine (CCGT) facilities, systems that generate electricity more efficiently by combining gas and steam turbines. Such a shift would not only reduce pressure on the hydroelectric system but also lower emissions associated with gas flaring.

“This could be the single biggest climate action Venezuela could take in the short term,” Palacios argues. 

Other proposals involve allowing independent power producers to generate electricity for specific industrial regions and oil hubs, reducing pressure on the fragile national grid. She has also suggested the creation of autonomous microgrids operating in “island mode” (localized systems capable of functioning independently when the national grid fails) to provide more reliable service to critical industrial, commercial, and residential areas. Battery storage systems could also help stabilize electricity supply.

Renewable energy is also part of the conversation. Venezuela relies on largely clean, hydroelectric energy, but Palacios sees potential for solar, wind and biofuel projects. Other oil-producing neighbors like Brazil, Colombia and Argentina serve as prime examples in that sense.

The challenge is not just technical. Broadly speaking, there is agreement among specialists about what Venezuela’s electrical system needs, and what requires fixing: new thermal generation, modernization of transmission infrastructure, decentralized generation capacity, tariff reform, and a new regulatory framework capable of attracting investment. The financing problem is huge: rebuilding Venezuela’s grid would require enormous amounts of long-term capital. Gelvis Sequera, who chairs the domestic Association of Electrical and Mechanical Engineers, places the required investment at around $20 billion.

“The electricity sector is a highly capital-intensive sector that requires large investments to be made before a single cent of profit is seen,” Palacios told Caracas Chronicles. “That is why counterparty risk is fundamental in the electricity sector: ensuring that the user pays you, and on time, is essential.”

But many investors remain cautious. According to Reuters, several companies that recently held meetings with Venezuelan officials left unconvinced about the prospects of doing business. One executive summarized the dilemma bluntly: “The power plants have not been properly repaired in 10 years, so the needs are almost infinite. But they still have no clue how we would get paid.”

The vicious cycle of regional power cuts affecting refineries and fuel production, and therefore also undermining the power sector, needs a major overhaul to finally be brought to an end.

When considering whether to deploy capital in Venezuela, investors are less confused about the needs and more about the ifs. They are uncertain about whether the Venezuelan State can offer credible guarantees, stable regulation, enforceable contracts, and reliable payment mechanisms over the long term.

As Palacios put it: “Power infrastructure is a low-margin business, established for the long term and highly dependent on regulatory and macroeconomic risks.” For that reason, she argues that regulatory clarity, transparent tariffs, and technically competent institutions are indispensable if Venezuela hopes to attract serious capital into the sector.

This also raises uncomfortable political questions about the future role of CORPOELEC, the omnipotent overseer of Venezuelan electricity. Founded by Hugo Chávez in 2007, the public company serves as the power grid’s service provider, operator and developer.

“Venezuela needs to seriously rethink the role of CORPOELEC and the State in providing such a fundamental service,” Palacios says. “It is not possible to solve this crisis with the current management structure.” At the moment, however, there are few signs that such reforms are imminent.

“To build and rebuild a reliable system will depend on having the right actors on the table”, she continues, pointing out that multilateral organizations can provide technical capacity and long-term financing that can “de-risk investment”, giving some assurances to the private sector.

“There’s a lot of Venezuelan entrepreneurship more than willing to invest in a system with clear rules based on international standards”.For now, as hopes of an economic recovery reach their highest levels since the Chávez era, Venezuelans long accustomed to blackouts are desperate to avoid a repeat of the worst 2019-esque scenarios. The contradiction is also acute for Delcy Rodríguez, whose critical infrastructure problem is one of the most immediate constraints on the reopening she is attempting. The vicious cycle of regional power cuts affecting refineries and fuel production, and therefore also undermining the power sector, needs a major overhaul to finally be brought to an end.