Venezuela and Peru Power Contrasts

Brian Hicks

Written By Brian Hicks

Posted March 3, 2010

More and more, Peru is becoming one side of a study in contrasts that has Venezuela at its other end.

The Peruvian government says that electricity prices have declined by 30% in recent years, due to encouragement of foreign investment in the country’s natural gas infrastructure. The results of that government approach are primarily visible in the Camisea extraction and pipeline project in central Peru that came online in 2004. Now, Camisea is delivering greater supplies of hydrocarbons by the year.

In October 2009, the Ministry of Energy and Mines predicted that a World Bank-funded expansion of the Camisea pipeline would boost throughput capacity 43% by the end of 2010. Domestic demand, not exports, are the priority, even though President Alan Garcia is also targeting major liquefied natural gas (LNG) sales to other countries.

Peru’s economy grew by 3.4% from the fourth quarter of 2008 to the same time in 2009, giving it full-year growth of .9%. Venezuela’s economy shrank by 5.8% from Q4 ’08 to Q4 ’09.

Now, after expropriating the production and exploration properties of ExxonMobil and ConocoPhillips, President Hugo Chavez and his government are reported to owe American businesses $12 billion for seizures. The Venezuela-U.S. Chamber of Commerce puts at 28 the number of member companies whose operations have been nationalized by Venezuela.

Venezuela, an OPEC member whose economy is heavily dependent on fossil fuels, gloated when oil prices moved into triple digits before the global recession hit, but these days blackouts and electricity rationing are persistent threats in the capital of Caracas and elsewhere.

Down in Peru, the official Andina press agency reports that 94% of the population is expected to be covered by electricity access in 2011. The country’s official investment and new initiatives to draw local and foreign companies into renewable energy production will keep moving prices down and access up in Peru.

-Sam Hopkins

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