June 13, 2011 / 8:46 PM / in 7 years

Venezuela sanctions high consumers in power crisis

* Blackouts in OPEC member drag on for second year

* Power crisis a major problem for President Hugo Chavez

By Diego Ore

CARACAS, June 13 (Reuters) - Venezuela set new sanctions on Monday for high electricity consumers as the South American OPEC member nation faces power cuts for a second year.

Blackouts around the nation of 29 million people are causing irritation in homes and businesses, testing President Hugo Chavez’s popularity ahead of next year’s election and complicating a post-recession recovery. [ID:nN09108546]

At a news conference in Caracas, ministers unveiled a series of measures intended to reward those who reduce consumption while penalizing those who do not.

Anyone increasing electricity demand by more than 20 percent will be fined up to 200 percent of their bill, according to the new rules. Those who reduce consumption by a fifth could benefit from a 50 percent discount on their bill.

“Demand is excessive. It’s precisely the correction of this waste, so typical in our society, that these measures are intended to address,” Electricity Minister Ali Rodriguez said.

Last year, the government blamed a drought for the power cuts, but there has been an abundance of rain in 2011 to fuel a grid more than two-thirds dependent on hydroelectric generation, so the problem is more embarrassing for Chavez.

He and his senior ministers blame waste and “sabotage” by political foes, but critics say the crisis lays bare the mismanagement of his government during 12 years in power.

At the weekend, residents in west Venezuela protested with pots and pans during a blackout affecting five states.

Also among the new norms announced on Monday were instructions to public bodies, industries and shopping centers to install enough of their own self-generated capacity to reduce consumption by 10 percent.

The measures are deja vu for Venezuelans, who underwent similar sanctions — plus rationing in most parts of the nation, except Caracas — during 2010.

Venezuela has national demand of 16,500 megawatts and a theoretical capacity of 25,000, but much of the grid is in a poor state of repair.

“Ongoing blackouts pose a risk for the country’s still-fragile economic recovery, particularly if they affect the oil sector,” Eurasia Group consultancy said.

“Electricity shortages could also pose a political liability for President Hugo Chavez heading into the 2012 presidential election. The 2009-2010 power shortages caused Chavez’s approval ratings to fall.”

Venezuela’s economy grew 4.5 percent in the first quarter, compared with the same period last year, after falling 1.7 percent in 2010, a second year of recession.

According to the International Energy Agency (IEA), Venezuela has the second highest level of energy consumption per inhabitant in Latin America. (Writing by Andrew Cawthorne; editing by Jack Kimball and Jim Marshall)

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