Venezuela Power Report Q2 2016 - New Market Report

From: Fast Market Research, Inc.
Published: Tue Feb 16 2016

Venezuela's power sector continues to struggle under high demand with extensive outages caused by ageing infrastructure and a lack of sufficient capacity. With oil revenues falling, extensive subsidies and a generally uninspiring economic environment, we do not expect to see any significant investment, either public of private, in power infrastructure in the short - to medium- term. As such our forecasts for growth in generation and capacity remain broadly unchanged this quarter. Over the longer term there is certainly the need for significant investment in generation and transmission infrastructure, and with political change in the pipeline following December 2015's elections, we may see a more positive investment environment down the road with sectors such as hydropower and non-hydropower renewables presen ting extensive growth potential .

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With no new projects entering the development pipeline we are maintaining our current forecasts for growth in generation of 6.2% in 2016 followed by a more subdued growth of 1.5% annually over the remainder of the forecast period, meaning consumption will continue to outstrip supply growth.

Power outages continue to plague Venezuela, despite campaigns by the government to reduce consumption. In October 2015 the country's largest oil refining complex at Amuay and Cardon was shut down by a power failure and numerous local power cuts, many of which have been attributed to sabotage, frequently disrupt businesses and households for several hours a day.

In early January 2016 Venezuela announced that state-owned oil company Petroleos de Venezuela would be halting natural gas exports to neighbouring Colombia. The export halt has been attributed to a need to bolster domestic natural gas fired generation following a downturn in hydroelectric output as a consequence of droughts.

Political change is on the agenda in Venezuela. In December 2015 elections, the opposition coalition won a two-thirds majority in the country's parliament, the first time in 16 years that the Socialist Party lost control of Congress. The Democratic Unity coalition plans to make sweeping changes and while the impact will not be immediate, over the medium to long term this could indicate an improved investment environment and scope for substantial development in the power sector.

The Venezuela Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.

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