Paraguayan energy crisis tests president
* Power crisis puts pressure on leftist president
* Business leaders fear blackouts could impede recovery
By Daniela Desantis
ASUNCION, Feb 10 (Reuters) - An energy crisis in Paraguay is disrupting factories and testing leftist President Fernando Lugo, who ordered the lights to be switched off at the presidential palace on Wednesday to save power.
The impoverished country, which gets much of its power from the massive Itaipu hydroelectric dam it co-owns with Brazil, has suffered a series of blackouts over the last 10 days that have hit mains water supplies during a heat wave.
Paraguay's state power agency has declared a state of emergency and officials have warned it will take at least three years for modernization works on the national power grid to be completed.
Lugo ordered all ornamental lights to be turned off at the presidential palace on Wednesday and urged state agencies to save energy as demand hits record levels.
"The president is taking certain measures that, though they might not alter the course of history and resolve the energy problem, are a symbolic gesture," Communications Minister Augusto Dos Santos said.
Paraguay's Congress is closed for the summer recess, but lawmakers were summoned on Monday to evaluate granting $60 million to the state power agency ANDE to buy and rent generators.
Demand for electricity in the landlocked nation has risen 50 percent in the last six years, mainly due to increased use of air conditioners and fans.
The crisis is causing concern among business leaders, who fear it might affect the economy's chance of rebounding from a 3.8 percent contraction last year -- it's worst performance on record.
"There's not a single industry that isn't suffering as a result of this drama," Gustavo Volpe, head of the Paraguayan Industrial Union, told reporters.
Analysts say the energy supply problems reflect widespread neglect in state companies, while Lugo has blamed the crisis on corruption and mismanagement during decades of rule by the opposition Colorado party.
Paraguayans, who often endure shortages of power and water during heat waves, are losing patience with state authorities and the energy crisis is proving another challenge to an administration already facing sharp opposition criticism.
"They knew the energy difficulties they'd face, but all they've done so far is come up with temporary answers," said Senate President Miguel Carrizosa of the center-right Patria Querida Party.
"In other countries, presidents have paid a high price for this," he said. (Writing by Luis Andres Henao; Editing by Marguerita Choy)
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