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Power shortages hit Venezuela again

disclaimer: image is for illustration purposes only
by Staff Writers
Caracas, Venezuela (UPI) May 10, 2011
Power shortages hit Venezuela again after several months of respite, plunging large areas, including homes and factories, into darkness.

Widespread electricity supply disruption caused traffic jams and blocked public transport, leaving thousands of travelers stranded.

The blackouts began Monday when nearly half of Venezuela was affected, with electricity cuts reported in 11 of the 23 states.

Venezuela suffered blackouts in 2009 and again last year but the government said at the time those disruptions resulted from drought that depleted water levels in the country's hydro-electric power generators.

There was no immediate explanation for the latest blackouts. Critics say the government needs to spend more to upgrade the country's power generation capacity.

Large-scale nationalization of private sector firms and dismissals of employees from nationalized firms in the service industry is also seen as a cause of Venezuela's woes.

The country went into recession after the 2009 economic downturn and faced further troubles as the drought hit agriculture and industry, depleting national growth.

President Hugo Chavez predicted Venezuela will emerge from the recession in 2011 but the return of power blackouts could prompt the government to revise its projections for an early recovery.

The full impact of the power cuts this week is yet to be known. The 645,000 barrels-per-day Amuay oil refinery was among industries hit. The refinery is in Paraguana in the northwestern state of Falcon. Officials said the refinery was back in operation after the disruption caused by the power cuts.

Venezuela also faced problems maintaining its crude oil production and exports, partly because of lack of maintenance, resulting accidents at installations and stoppages.

Officials said the disruptions would be short-term.

The state-run PDVSA oil company in a statement said "the delivery of fuel to the national and international market is guaranteed."

The power outages follow on a running feud between Chavez and the country's business and private industry sector over government efforts to fast track the country's economic integration with Mercosur trade bloc as soon as Venezuela wins ratification of a long-delayed membership.

Critics say such integration will be ill-timed as Venezuela's economic conditions are too uncertain to withstand robust competition from neighbors Argentina and Brazil.

Venezuela's membership of the trade bloc is snagged by the Paraguayan Parliament's opposition, mainly in response to what critics cite as the controversial style of governance under Chavez but also because of that country's internal squabbles.

Support for Venezuela's membership of the trade bloc is based on expectation that the country's final admission to the group will open a huge consumer market for other partners.

The Venezuelan industry strongly differs, fearing unfair competition from neighbors and a slow demise of the country's struggling industries, already hurt by recession, lingering effects of a drought and crippling power and water shortages in 2009 and 2010.

Chavez intensified his drive for Mercosur membership after he took Venezuela out of the Community of Andean Nations in April, arguing the country's interests would be better served by strengthening bonds with Mercosur.

Mercosur was founded in 1991 and includes, as full members, Argentina, Brazil, Paraguay and Uruguay and, as associates, Bolivia, Chile, Colombia, Ecuador and Peru.

The strongest opposition to Mercosur membership came from Ismael Perez Vigil, executive president of the Venezuelan Confederation of Industries.

"Incorporation to Mercosur at this moment is really harmful for Venezuela's industry," he said, adding the industrial sector was already weakened by the government policies.

Venezuela's private sector couldn't stand up to better-developed manufacturing rivals in Argentina and Brazil, he said.

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