Venezuela’s Corpoelec: The Lowest Billing Electric Company in Latin America

Venezuela’s state electricity company, Corpoelec, generates only $80 million annually, a fraction of the billions earned by similar sectors in Colombia, Chile, and Peru, according to engineer José María De Viana. Speaking at a CEDICE Libertad forum, De Viana attributed this disparity to a state monopoly and heavy subsidies.

De Viana, a professor at the Universidad Católica Andrés Bello (UCAB) and former president of Hidrocapital, stated that the lack of electricity is a primary barrier to economic growth. He noted that interior cities currently face severe power rationing lasting between six and eight hours daily.

Why is Venezuela’s electricity revenue so low compared to Latin America?

The revenue gap stems from a state-run monopoly and a rentier criterion that fails to recoup service costs. According to De Viana, the electricity sector in Colombia bills $15 billion per year, while Chile’s sector brings in $11.8 billion and Peru’s generates $9.6 billion.

In contrast, Venezuela’s $80 million annual collection reflects a system that does not value the service adequately. De Viana argued that Venezuela is not as poor as its revenue suggests, but rather lacks an efficient system to protect the poor while collecting sustainable rates.

What caused the collapse of the electrical system?

The current crisis followed a “progressive process of destruction” that began in 2007 when the government decided the service would be a state monopoly. This transition dissolved previous alliances between public and private sectors.

During the 1990s, De Viana said the service was among the region’s best, managed through a coordination office called OPSI. That model included five state companies and six private firms working in harmony to support high per capita consumption and industries like aluminum and steel.

Thermal plants now fail due to metal-mechanical deterioration and a critical lack of fuel. De Viana linked this decay directly to the decline of the national oil industry.

How could the power grid be recovered?

Recovery may require transforming the current public monopoly into an open system. De Viana suggested that opening the sector to private participation could turn ruined services into centers of economic value.

A possible next step would be inviting international knowledge and capital. De Viana pointed out that in neighboring countries, over 40% of privatized electricity firms eventually end up in the hands of local capitalists or savers.

The engineer emphasized that any recovery effort would likely need a high-level technical and managerial team to lead the transition. He argued that without electricity, other crises in water and telecommunications cannot be resolved.

Frequently Asked Questions

How much does Corpoelec bill annually compared to other regional neighbors?
Corpoelec bills $80 million per year, whereas Colombia bills $15 billion, Chile $11.8 billion, and Peru $9.6 billion.

What is the impact of the electrical crisis on Venezuela’s interior cities?
Residents in interior cities suffer severe power rationing of between six and eight hours daily.

What happened to the electrical model in 2007?
The government decided to make the electricity service a monopoly managed by the state, ending the previous public-private alliance model.

Do you believe private investment is the most viable path to restoring public utilities in developing economies?