Venezuelan Government Signs Energy Agreement with General Electric

The Venezuelan government has reached an agreement with US-based conglomerate General Electric. This initiative aims to enhance the electric service in Venezuela, a country often experiencing power outages. Observers point to issues such as generation capacity, inadequate maintenance, and poor management practices as causes of these disruptions.

The agreement was signed at the presidential palace, Miraflores, led by Venezuela’s interim president, Delcy Rodríguez, and Eric Gray, CEO of GE Vernova’s energy segment. This division of General Electric focuses on electricity generation, transmission, distribution, and storage. Rodríguez described the memorandum of understanding as a ‘historic step’ towards restoring an essential service. The collaborative effort over six weeks resulted in a comprehensive report on Venezuela’s electric system.

Rodríguez urged the teams involved to expedite the drafting of the final contract. The goal is to initiate projects that will restore 1,000 megawatts within the first 24 months and over 5,000 megawatts within four years. The agreement’s cost was not disclosed.

Experts often highlight persistent failures in 23 states and the Venezuelan capital, attributing most to poor management and lack of maintenance of the national electrical system. The infrastructure’s degradation, especially of the thermoelectric plants, is notable. These plants were once backup systems during dry seasons or emergencies at the Gurí hydroelectric plant, which supplies 60% of the nation’s power. Venezuela is estimated to have a 3,000-megawatt shortfall.

The agreement followed a series of legal reforms since January. These reforms reduced the stringent state control over the energy sector, encouraging more foreign investment after two decades.

In response to these legal changes, particularly in hydrocarbons, the US Treasury Department has eased sanctions on Venezuela. This change has expanded the ability of US and international energy companies to operate within the country.

Following a US-led military operation that ousted and captured former President Nicolás Maduro on January 3, Washington has proposed a three-phase roadmap. This plan includes stabilizing the country, fostering recovery, and transitioning to democracy.