Venezuela to Ration Electricity Amid Severe Drought

<a href=smartmoney.com>Dow jones April 4, 2003

CARACAS -(Dow Jones)- Venezuela will have to ration electricity from about the end of May because a severe drought has reduced hydroelectric reservoir levels to a 53-year low, the government's Venpres news agency reported Friday.

"If this one-year-old drought continues, we'll be forced to ration electricity by the end of May," Miguel Lara, the National Grid's managing director was quoted as saying.

The government hopes to make up for some of the likely hydroelectric power shortfall with extra thermoelectric power, according to Lara.

State-run hydroelectric electricity provider Edelca usually serves about 70% of Venezuela's power needs. Thermoelectric power accounts for most of the remainder, with about 18% coming from government-owned facilities and around 12% from AES Corp.(AES) subsidiary CA La Electricidad de Caracas, which supplies Caracas and its suburbs.

Power cuts in Venezuela's industrial belt could affect the oil, iron, steel, and aluminum industries - which make up around 50% of gross domestic product - even as the country fights an enduring recession highlighted by an 8.9% economic contraction last year.

Electricity demand last year was 89,562 GWh, 2.8% higher than in 2001.

• By Jehan Senaratna, Dow Jones Newswires;58212 564 1339 jehan.senaratna@dowjones.com

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