The Venezuelan Parliament, controlled by Chavismo, unanimously approved a partial amendment to the electricity legislation. The objective of this reform is to stimulate both private and foreign investment in the sector, which has faced a prolonged crisis that intensified this year due to increased energy demand.
The new Organic Law of the Electric System and Service complements other modifications to the Venezuelan legal framework, aiming to allow strategic sectors to be opened to international capital. The regulation stipulates that production activities may be carried out by the state operator, as well as by qualified private and mixed companies.
According to the regulation, permits granted to private entities will have a maximum validity period of 25 years. Jorge Rodríguez, president of the National Assembly (AN), stated during the debate that the law does not aim at privatization of the sector, but rather at promoting the inclusion of private sectors in electricity generation and self-generation.
The Ministry of Electric Energy will be responsible for granting concessions for productions exceeding 50 megawatts (MW) or involving or impacting public domain assets, main transmission systems, distribution and commercialization in exclusive service areas, or integrated regional systems.
After qualification is complete, the operating company must return and transfer to the state corporation, Corpoelec, or whomever is designated, all incorporated, constructed, or acquired assets without any charge during its operation period.
Additionally, the law stipulates that any divergences or controversies of any nature that cannot be resolved amicably between the parties must be submitted to Venezuelan courts or alternative dispute resolution mechanisms, such as mediation and arbitration.
Regarding oil companies, the legislation requires them to guarantee and ensure a continuous, regular, reliable, sufficient, and stable supply of electrical energy for the execution of their primary operations. This must be done through self-generation, cogeneration models, or contracting third parties, aiming to ensure operational autonomy.
Independent electricity production societies and oil companies do not require government authorization to generate energy for their internal networks, except when there is interconnection with the national grid.
Venezuela has faced an electricity crisis for more than ten years, but in the last twelve months, power outages have increased, leading to demonstrations in various states of the country. The opposition and experts point to corruption and maintenance deficiencies as causes of the problems, while the Government attributes the situation to sanctions, climatic events, and alleged sabotage actions. The interim President of Venezuela, Delcy Rodríguez, had recently promised that the crisis relief would occur soon.
