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Siemens to Help Rebuild Venezuela’s Electricity Grid
(Bloomberg) -- Venezuela is in talks with the global energy giant Siemens Energy AG to repair power plants as part of a government plan to rebuild a crumbling electricity grid plagued by constant blackouts and a lack of maintenance.
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Siemens is working with the government on potential contracts aimed at repairing gas- and diesel-burning generation facilities that serve the capital, Caracas, as well as those that supply electricity to infrastructure used by the oil industry, according to the company’s business manager in the country, Eric Soto.
The German company was granted licenses by the US Treasury to work with the state-owned Petroleos de Venezuela SA, which owns the plants, via third parties and with the power utility Corpoelec, Soto said. It marks the rare deal in which an international company is prepared to work with President Nicolas Maduro’s government, which is under stiff US economic sanctions.
The repairs could boost power generation at two plants that sum up 1,000 megawatts capacity for Caracas, helping it overcome regular blackouts and years of rationing, as well as improve power supply in oil-producing areas hit by outages.
Neither the US Treasury or PDVSA responded to messages seeking comment.
As Venezuela’s economy begins a slow rebound, Maduro is attempting to rebuild the country’s generation system with a plan to invest around $1.5 billion to recover some 9,000 megawatts of production by 2025, according to a Corpoelec document seen by Bloomberg. The grid, highly dependent on the huge Guri hydroelectric facility in southern Venezuela that produces as much as 80% of the power, has been ravaged by years of mismanagement.
Although Guri and other hydro- and thermoelectric plants have the capacity to produce roughly 32,000 megawatts of electricity, the system has trouble meeting the current demand of around 10,500 megawatts, according to Nelson Hernandez, an energy consultant in Caracas. Due to a deteriorated distribution grid and dysfunctional power plants, rolling blackouts and rations are common, especially in poor neighborhoods of Caracas and in smaller cities throughout the country. In 2019, Venezuelans were left without power for days due to a nationwide blackout.
The shortages also suppress production at PDVSA, which has to regularly shut down production at oil fields due to the lack of power for the pumping units.
One of the US licenses, granted in June, allows Siemens to work with Corpoelec on thermoelectric plants in Miranda state but prevents it from increasing capacity, Soto said. A second license, which expires in October, authorizes Siemens to sell and repair components at PDVSA-owned power plants. It carries similar limitations.
The German company has been present in Venezuela for 60 years, and roughly half of the country’s thermoelectric plants use Siemens-owned technology, with the other half using General Electric Co. technology. Siemens also produces many of the components at power substations, which are in need of repairs, Soto said.
(Corrects first two paragraphs to reflect talks are ongoing)
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