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Venezuela

Published on Wednesday 16th August 2017

    • Venezuela

      There has been increasing investment in conventional fossil fuel generation capacity to reduce reliance on hydropower and use domestic hydrocarbon resources.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      It has increased in the past few years at annual average rate of 4.5 per cent. However, the increase in generation has not kept up with the increase in demand, thus the country is currently experiencing electricity shortages. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The generation, transmission, distribution and commercialisation of electricity are reserved for the government; however, with a limited concession granted by the government private entities can generate, transmit and distribute electricity.

      The electric sector was largely unregulated until the enactment of the Electricity Service Law in 1999 (reformed in 2001) that theoretically establishes an open market for electricity in the country; however, in 2007 there was a change of direction in the sector and it is now completely controlled by the state, which acquired the largest privately owned power company in the country (Electricidad de Caracas) in 2007 through a public tender offer and merged it with and into the existing regional publicly owned companies to form a single national government-owned company called Corpoelec. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The regulator is the Ministry for Electrical Energy, created in 2009. In addition to regulating the sector its main functions are the formulation of all policies related to the electric sector, development of generation and setting of rates. The regulator is not considered to be independent but closely controlled by the executive branch, its head can be removed at the discretion of the President. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      No, although pursuant to the Electric Service Law the regulator can grant limited concessions for the sale of electricity; in practice the sale of electricity is only done by government-owned entities, mainly Corpoelec.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      No, there are no ISOs in Venezuela, the operation of the market is centralised by government-owned entities that undertake power-search activities directly or through government-owned entities, namely Corpoelec.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The rates are set by the Ministry of Electrical Power. The components that affect the rates are the intended use (commercial or residential), the zoning of the consumer and the level of consumption (the rate is lower for consumers who use less). The rates have been frozen since 2002.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The Ministry of Electrical Power is responsible for issuing authorisations for power generating projects for generation, transmission and distribution. Additionally, depending on the type of project, environmental licences may also be needed.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The government is not currently conducting auctions to award long-term power purchase agreements to public and private off-takers.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      There are two wind farms operated by the government that generate between 25 and 30MW annually and 2MW from solar thermal collectors. The annual consumption is about 18,000MW, which means that only less than 0.1 per cent of the output comes from renewable power sources. Although renewable energy projects are part of the country’s development plan, there are no specific targets or milestones.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Yes. There is a currency exchange control regime that heavily restricts foreign exchange including the repatriation of dividends. Additionally, electricity can only be paid for in local currency. All of this makes acquiring equipment abroad and repatriating dividends difficult. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      No, there is currently no market as all of the electricity is generated by government-owned providers using the same mechanism.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The government has set up small wind farms, however, they represent a very small percentage of the overall output of electricity and there are no tangible plans for its growth. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Yes. There are several factors, there is a foreign currency exchange control that severely restricts the capacity of corporations to acquire foreign goods and repatriate dividends, very limited protection of foreign investment, very strict labour and regulatory provisions and a rate-setting policy. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Subsurface rights are not separate from land rights, with the exception of minerals and hydrocarbons in the subsurface that belong to the republic pursuant to the Venezuelan Constitution. The Electricity Service Law provides a regime for easement rights in power projects. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Wheeling tariffs are set by the regulator and there are no differences based on power source or technology.  

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Although there are generic open rules set forth in the Electricity Service Law, in practice there is only one power transmission system controlled by Corpoelec.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Pursuant to the Electricity Service Law a favourable opinion by the Ministry of Energy is needed for cross-border power exchanges. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      There are no merchant power plants in Venezuela that sell power to third parties as a non-utility, some private companies and individuals operate power plants for self-supply which are not financeable. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The bigger difficulties for financing power projects in Venezuela are rate regulation, foreign exchange control and difficulty of enforcing collateral over power infrastructure. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The most significant obstacles are the heavy restrictions and regulations for the private sector, the existence of a foreign currency exchange control that restricts the capacity to acquire equipment for electricity generation and the cap set on electricity rates that make the service unprofitable. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The sector requires massive investments in generation and transmission. An opening-up of the sector to private companies in the medium term should be expected. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Owing to currency regulations most contracts signed by the government-owned entities that generate, distribute and sale electricity in Venezuela are denominated in local currency.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      The Law on Foreign Investments establishes the regulatory regimes for foreign investment and no particular percentage of limitation for electricity projects. The Electricity Service Law establishes only limited concessions for a determined amount of time (up to 30 years, renewable for an additional 20 years). In practice there is a limitation on foreign capital in key sectors of the economy.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      In 2007 the government acquired via a public tender offer the majority of the shares in Electricidad de Caracas, the integrated electricity company that provides services for Venezuela’s capital region, from AES Corporation, which had acquired its participation in 2000. In the same year the government merged Electricidad de Caracas with the existent regional government-owned power companies into a single government-owned company named Corpoelec. Since then, the M&A market has not been active in the sector.

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

    • Venezuela

      Most contracts signed by government-owned entities that generate, distribute and sell electricity in Venezuela provide for the exclusive jurisdiction of Venezuelan courts. 

      Answer contributed by Fulvio Italiani , Carlos Omaña from D’Empaire

      Last verified on Friday 14th July 2017

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