It’s electricity Margarita needs
I haven't even moved to Margarita (about 15 years to go) and already I must ask my readers to bear with me because, once again, I just have to write about something related to the Island. I believe my reasons will be understood.
This week we witnessed in the press the first skirmish resulting from the privatization of the electricity sector of Margarita, a process I have always, publicly, held as fundamentally flawed. Of course, the system broke down and the submarine cable, 22 years old and never really maintained, refused to cooperate with the new owners.
By sheer coincidence, this week I saw the publication of a series of impressive photos showing the advance of the construction of the power lines to Brazil and read about the new government's commitment to reinitiate in 10 to 14 weeks, the privatization of other electricity companies, hoping that way to raise more funds.
I will not only repeat myself I will also do it shamelessly by quoting from my own articles. There is no "I told you so" intentions but just the need to show that all the current issues were well known, at that time. In February 98, in an article named electricity to Brazil I wrote:
"I am convinced that if we are to invest in transmission lines, Margarita for one, is probably much more deserving than Brazil. I simply don’t understand how and why an important pole of development for the country such as Margarita is being forced into more expensive generation systems such as, for example, the time-worn idea of a gas pipeline from the mainline to the island, while we are simultaneously developing mega-projects in order to export power to Brazil.
You don’t have to be an expert in environmental affairs to suspect that a 217 Km. suspended power line which must be supported by 512 towers, each of them 36 meters high, spread out through environmentally sensitive areas such as the Canaima National Park, the Imataca Forest Reserve and the Southern Protection Zone of the State of Bolívar, must have serious implications. It is not enough to assert that there will be special care taken to camouflage the towers in order to reduce contrast with the horizon.
I propose that we study the possibility of a swap. A new power distribution system for Margarita, via suspended lines and or submarine cables, in exchange for a gas pipeline (underground) to Brazil. The latter can then build it’s own power plants wherever and whenever it sees fit."
This line of reasoning had its origin in an article published June 1997 and where I, with some vehemence expressed: "I would consider it unjust if the Island of Margarita ended up paying the highest tariffs in the world for its energy just to satisfy the need to offer an acceptable return to an investor who would not only be required to invest serious amounts of resources in an expansion and investment plan, but also to maximize the income for CADAFE, FIV or any other state entity."
Then I wrote about 4 articles more up until September 1998 when SENE was finally privatized and the results were (for me) much worse than expected. Again I quote myself "If Cadafe and FIV say they would have been happy with the base price of US$ 35 million, why then, will they take the US$ 55 million premium away from the island? We must remember that the entire US$ 90 million, and specially the premium of US$ 55 million, will be ultimately footed by Margarita’s population"
Although I had wanted that the concession had been sold for 1 US$ so as to obtain more reasonable rates, as a remedy I suggested in that article that at least the US$ 55 million premium be retained by the island" for the submarine cable, a new pipeline of potable water, or any other need. But, that was not to be.
In response to the government's euphoria I also wrote " We obviously understand the laughter and back slapping by State officials. We can almost hear them say “Marvelous. We have gotten rid of the responsibility of the supply of power to the island. On top of this, we have received a front-end tax payment of US$ 90 million on top of all the other taxes we will be able to charge in the future! Nobody was the wiser for it! What a deal! Let’s do the next one!” - And that is, to the tune of a minimum US$ 700 Million, what they are announcing now.
Today we can still try to mend it or at least, not make it worse. First of all, reading that the current owner of SENE is interested in the gas pipe to Margarita, let's make it perfectly clear to him that the island, as the rest of the country, is not interested in gas per se but inexpensive electricity and that in Venezuela, until now, this has meant hydro electricity. If gas is finally imposed Margarita should at least request a supply contract of gas, valid for 50 years, and at a price equal to marginal cost.
An alternative is for Margarita to have first recourse over the new funds the government will receive from the new privatization in order to recover the full US$ 90 million that was diverted from the island, and to help pay for the submarine cable that should have been put in place before privatizing in Margarita. And of course, renegotiate the whole tariff structure.
Daily Journal, Caracas, July 6, 1999
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