Oil report

Venezuela responds to disquiet over power crisis

* Government lifts some restrictions in malls

* Energy shortage comes amid recession, ahead of election

* Government says drought, rising demand to blame

CARACAS, Jan 6 (Reuters) - President Hugo Chavez’s government has relaxed unpopular electricity rationing at malls amid an energy crisis that dampened the New Year’s fun of shopaholic and party-loving Venezuelans.

Citing an unprecedented drought and emergency water-levels at Venezuela’s main Guri reservoir, the government began the year with drastic rationing across the South American nation, from aluminum smelters to street-lights.

At a time when many Venezuelans are on holiday and, if not at the beach, flock to shopping malls and night-spots for their recreation, new early-closing hours from Jan. 1 hit hard.

Malls could only use the national grid between 11 a.m. and 9 p.m., though most are full of restaurants, cinemas, bars and discos that normally stay open much later.

Anti-government newspapers and politicians jumped on the measures to accuse the Chavez government of being a killjoy, punishing ordinary people for its own failings.

But after discussions this week between shopping mall managers and government officials, the rules were modified late on Tuesday to allow recreational spots to stay open later, and essential services like clinics or banks to open earlier.

“Thank God! Now I can go to the cinema again with my kids,” said mother-of-three and office administrator Esther Pereira. “It’s been a horrible New Year with all these restrictions.”

The easing of the mall restrictions takes the steam out of a campaign by the opposition and anti-Chavez newspapers, who seized on it as a front-page issue in a politically sensitive year when Venezuelans vote for a new legislature in September.

But the government still faces a major challenge to address the national power shortfall. Staggered electricity cuts remain in place around the country, and basic industries may have to shut down to ease the strain on Guri. [ID:nN04240130]

“If the Guri reservoir dries up, it dries up for those with the government and with the opposition,” Electricity Minister Angel Rodriguez said, calling for a united approach.

The vast Guri hydroelectric plant provides about two-thirds of the OPEC member nation’s power.


The cuts, aimed at saving 20 percent of electricity output, have come as Venezuela is mired in recession, behind the cycle of most other nations affected by the global downturn.

The economy shrank 2.9 percent in 2009, ending a five-year “petro-boom”, and the government is tentatively forecasting 0.5 percent growth for this year. [ID:nN29202281]

It was precisely that past growth, the government says, which raised electricity demand to levels that are now hard to sustain. Officials say national consumption, compared to GDP, is now 14 percent higher than the average in Latin America.

Critics, however, blame the power-cuts on mismanagement and lack of investment during Chavez’s 11 years in power.

Despite Venezuela’s economic slump, shopping malls are still packed, even by those who can only afford an ice-cream or just to show their children the bright lights for free.

Venezuelans are famous for their party ways, and love of shopping, dating from past decades of petrodollar-fuelled trips to Miami where, the joke goes, they would declare “Dame dos!” (Give me two!) of everything they bought.

Combined with water-rationing, and crime levels among the worst in the world, the power shortages have come at a bad time for Chavez, who is determined to keep his control of the National Assembly.

His traditionally high ratings have slipped to around 50 percent -- still good compared to many other world leaders, but worrying for a man whose power-base is the masses.

In his favor, though, Venezuela’s opposition parties remain divided and without nationally popular leaders.

“There is growing disenchantment with President Chavez, sure,” said Christian Voelkel, a risk analyst tracking Venezuela for IHS Global Insight. “But the opposition has failed to come up with a credible strategy to challenge him.” (Additional reporting by Patricia Rondon and Efrain Otero, editing by Anthony Boadle)