Venezuela Deepens Energy Rationing as Blackouts Loom

By Heather Walsh and Daniel Cancel

Jan. 12 (Bloomberg) -- Venezuela said it will cut electricity on a rotating basis to sections of the South American country’s capital and major cities as the government deepens energy rationing amid a drought.

Power will be cut for four-hour intervals in parts of Caracas starting tomorrow as dry weather reduces generating capacity at the nation’s largest utility, Javier Alvarado, president of government-run Electricidad de Caracas, said today on state television.

Venezuelan President Hugo Chavez is increasing energy rationing ... READ MORE

amid an economic slump and falling oil revenue that prompted his government to devalue the nation’s currency on Jan. 8 for the first time in five years. Venezuela is at risk for forced nationwide blackouts unless it stems declines in water levels at the reservoir supplying the nation’s largest utility, Electricity Minister Angel Rodriguez said yesterday.

“We could be entering a situation with no return” if the nation fails to save energy, he said.

Chavez cut working hours for government employees last week and urged Venezuelans to save water and energy amid the country’s worst drought in about 50 years. The drought may last another five months, Rodriguez said.

Output and refining at state-run oil company Petroleos de Venezuela SA won’t be affected by the rationing, a PDVSA spokesman who can’t be named because of company policy, said today in an interview.

In December, Venezuela halted several production lines at state-run aluminum companies Alcasa and Venalum as well as two units at Siderurgica del Orinoco’s steel mill known as Sidor to save electricity.

To contact the reporters on this story: Heather Walsh athlwalsh@bloomberg.net; Daniel Cancel in New York atdcancel@bloomberg.net

Last Updated: January 12, 2010 16:48 EST