Tag Archives: metals

Venezuela coin scam update

Hannah Dreier, the wonderful AP correspondent in Caracas, reports that coins have disappeared there. And yet the Venezuelan mint says it continues to produce them (Excel sheet).

Here are the number of pieces in circulation over the past couple years:

Venezuela Central Bank pieces in circulation

Thanks to the miracles of Excel, I was able to use that table to calculate a minimum number of how many pieces have been minted in the past two years, past year, and past month. (Note that this is net of any coins intentionally taken out of service, but that number is probably very small.)

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Another 1-minute search, another Venezuela scandal

You folks love these, so don’t mind me if I keep throwing them out there. A pal in Venezuela points out that you need a lot of 50-bolivar notes, now worth about US$1.50, just to get by, and that the 100-bolivar note remains the largest in circulation, five years after the disappearance of three zeroes from the currency so as to “strengthen it.” That’s all old hat, but it drives me to this monthly table from Venezuela’s central bank. Click it, you love Excel tables.

Then, with the miracle of subtraction, I take the number of coins or bills in circulation in June, from the second sheet of that document, and I subtract the number in June 2012, and that way I can see how many new coins and bills have been put into circulation in that 12-month period.

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Venezuela electricity conservation fails

Venezuela was going to cut 20 percent of its electricity consumption in a vast consciousness-raising exercise. Instead, electricity consumption is flat year-over-year as small consumers swamp the huge savings imposed on heavy industry.

The breakdown, utility by utility:

Peak demand, jan and feb y-o-y

Source: Centro Nacional de Gestion monthly reports

electricity consumption jan and feb y-o-y

Source: Centro Nacional de Gestión monthly reports

To explain:
Cadafe is the country’s biggest utility, handling 3 million customers, most of them unmetered small businesses and homes in low-income neighborhoods. Their consumption and peak demand rose year-over-year.

Edelca is the utility that handles the biggest users, such as steel mills, aluminum smelters, and municipal water districts. Their consumption and peak demand are down enough to balance out the increased consumption among most other utilities.

EDC is Caracas’s utility. There was a bit of savings there in January. Flat consumption in February. March, which hasn’t been released yet, will very likely show increased consumption year-over-year, as a heat wave caused demand to rise. (Air conditioning is probably the biggest single energy user in Caracas.)

Enelven is the utility for Maracaibo, the second-largest city. They actually have a relatively smart version of rationing there, in which neighborhoods are excepted from rolling blackouts for the week if in the prior week they saved at least 10% of their power. Sadly, some smarts haven’t been enough to save electricity, as electricity use surged year-over-year.

Enelval, which covers the industrial city of Valencia, predictably boosted energy use. Factories subjected to unpredictable blackouts are working longer hours to make up for the interruptions, and homes have their air conditioning and refrigerators turned up so when the lights go out, they can stay fresh for a while.

Short version: the heavy industry cuts saved our butts this year. We’ll see if power-plant construction can do the same next year.

(March numbers should be coming soon; I’ll update at that point.)

Electricity outlook: Still difficult

For the first time in well over a year, water levels are rising at Guri Lake, the source of more than 70 percent of Venezuela’s electricity. At last, we can stop worrying that the power grid will collapse in 2010. If the weather forecasts are right, there will be plenty of water to get us through the year. Looking forward to 2011, things are less cheery.

Traveling last week in Guayana I was impressed with how well understood it is among workers in the metals and electricity industries that 2011 is the crunch year, not 2010. The problem is simple. The crisis provoked no energy savings in the residential and commercial sectors, according to the monthly reports from CNG, which runs the power grid (and has now deleted the damning monthly reports from its website). The only sector that conserved was industrial, and even there, savings were achieved in only a small number of plants, entirely by slashing output (without layoffs). Reduced activity and shutdowns at a few iron, steel and aluminum plants saved the rest of the country its comfort.*

However, recovering the dam is going to be a long slog. Today’s report showed the reservoir has gained 24 cm since bottoming at 20 percent of its useful volume April 14. We need another 1,300 cm to get to the level we were at Jan. 1 and another 1,300 cm again to fill the reservoir, as it should be around New Year’s. At current electricity consumption and generation levels, that will never happen. Average water consumption from the dam this year — after conservation was imposed and water consumption rationed around New Year’s — has been 4,574 cubic meters a second. Average inflow into the dam in an average year is 4,500 cubic meters a second, Miguel Lara, the former president of the grid regulator (then known as OPSIS), told me in a phone interview. That means that at this year’s average water consumption and with average rains, the water level will be lower a year from now than it is now. With above-average rains, we can gain a few meters, but there are complications that make the situation worse.

First, industrial rationing has to end at some point. Venalum, Alcasa and Sidor can’t remain at such low production forever while maintaining full payrolls with (by Venezuelan standards) excellent pay and benefits. Managers at Sidor say the laborers who work in the heat of the steel mill make 7,000 to 8,000 bolivars a month, well above the salary of a Venezuelan accountant or doctor. The mills run luxury buses to and from the job sites. They have made some cuts in response to the losses they started to incur with the North American housing slowdown: they have slashed medical insurance and this year, in a local scandal, stopped providing new uniforms for their company sports teams. Cuts like that are no substitute for making and selling aluminum and steel.

Second, elections are coming. Normally, the Chavez government pushes consumption-oriented policies before elections to try and soothe the population. More home appliances will increase, rather than decrease, power use.

Third, when the dam levels are as low as they are now, you need to use more water to get the same amount of power. Edelca, the power utility that runs the Caroni River hydro complex, has squeezed 11.8 kilowatt-hours of electricity out of every cubic meter of Guri Dam water in the first half of April. That is down 8 percent from the 12.8 kWh of that Edelca generated from each cubic meter in the first half of December 2009. This is because when the dam is more than half full, the pressure is much greater than now, with far less weight forcing water through the turbines. In order to keep power generation average level we’ve had for the past few months, Edelca may have to increase water consumption from the dam.

Edelca cut flows through the dam from over 5,150 cubic meters a second in December to about 4,330 this month. It will take a lot of arguing for the managers there to convince Caracas not to boost flows again now that the rain is falling.

There are only two ways to escape this situation. First would be to implement effective energy-saving measures, such as water-heater timers, solar water heaters, enforcement against excessive air conditioning, a massive program of weatherization of home and offices, energy audits for small industry, encouragement to shut off televisions, requiring all residences to provide clothes lines, and increased use of natural gas for cooking. While the propaganda calling for power savings has gradually been getting better, none of these ideas are likely to be put into effect.

The other alternative is to increase power generation. This is the government’s plan. It has pledged to bring between 4 and 6 gigawatts of generation on line this year, depending on who is speaking and to what audience. Among the plans:

Generation barges parked by the Tacoa generation plant that serves Caracas. It’s unclear what’s happening with them, but this week state oil company PDVSA said a barge arrived in Lake Maracaibo to provide 103.5 megawatts of power starting at the end of May.

Planta Centro recuperation. South America’s biggest thermal generating plant, a 2,000-megawatt fuel-oil and natural-gas-powered beast, was supposed to be operating at increased capacity by now. Instead, it has continued to struggle. It has had at most one of its five turbines in service since March 26. It was completely down April 5-11. The challenges of getting it on line were epitomized in a rumor I heard from Jose Manuel Aller, a professor at Simon Bolívar University in Caracas. He said repairs on one generator were almost complete on a turbine earlier this year but the startup was rushed and technicians failed to put oil in a pump. The pump seized up and needed to be replaced. Given Venezuela’s difficult import environment, this took forever.

Wind turbines on the Paraguana peninsula. Starting next year, 70 1.3-megawatt windmills 70 meters high are supposed to start producing 100 MW of generation. (Note that this press release for the first time quantifies how much diesel is used to generate 100 MW of power in a thermal plant: about 2,000 barrels a day, it says.)

880 MW at Sidor. Former CVG president Rodolfo Sanz said 440 MW worth of turbines were on their way from the USA and that they’d be in service in May. The Nueva Prensa de Guayana reported that Sanz said the first 175 MW of plants would arrive by the end of February and the remainder two weeks later. Delays kicked in at once. This undated press release, posted between March 20 and April 5, says the second ship had just arrived. The Sidor power plant still has a long way to go before it’s operational; I can’t see how it will happen in May as promised.

So we shall see. I think that politically, Chavez has to end the rolling blackouts by August or face serious electoral consequences. I don’t see the grid getting more than about 200 MW of new generation before then. So I think Guri will recover a very limited amount this year. There are those who are more pessimistic, and believe Guri will end the year at 20%. I say at least 30%, maybe even 40. In any case, next year, there will be no room for the failures of conservation and delays in new construction that we’ve seen this year. The country will need to consume less, while running its basic industries, and with another 444,000 Venezuelans demanding their fair share of the electrons.

A challenge!

*Anglo American Plc’s Loma de Niquel mine in Aragua state used more power in February than it has in any month since May, according to CNG’s monthly reports.