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article imageCaracas could be about to go dark

By Business Insider     Mar 31, 2016 in World
The capital of Venezuela, Caracas, could be about to go dark.
The problem is Caracas' power source. According to Bloomberg, the Guri Dam, a hydro electric power plant, has seen its water levels dip precipitously low.
An engineer who managed the plant in the 1980s said there could be rolling blackouts in Caracas by late April.
“At the current rhythm, the minimum level to operate the 8 turbines could be reached by April 30,” Cesar Cardozo told Bloomberg. “That date could be extended into May if more severe rationing is implemented.”
Rationing in all aspects of Venezuelan life has already been severe for years. Citizens wait in long lines for everything from toilet paper to corn meal. Some, including Johns Hopkins professor Steven Hanke, calculate inflation at near 300 percent. That is why Hanke dubbed Venezuela "the most miserable country in the world."

Power

The electricity crisis is so bad, that President Nicolas Maduro gave the country an additional three days off over Easter to conserve energy.
In true Venezuelan government fashion, however, the country's leadership is blaming their political opposition for this issue.
Electricity minister Luis Motta Dominguez pointed out earlier this month that protests started around the time when the electricity system started showing signs of weakness.
"What ... a coincidence, no," he said. "A plan was put in place."
Of course major protests against Nicolas Maduro's socialist government have been drawing massive, sometimes violent, crowds since 2014.
In recent elections, Maduro's party lost control of the legislature, and yesterday it passed legislation giving amnesty to jailed political prisoners from over the years — the most famous of them being Harvard educated politician, Leopoldo Lopez.

A credit event

There will not be a presidential election in Venezuela until 2018, and the executive office has sweeping powers. That means the country's current decision-makers have a lot of room to run.
So far their policy has been to avoid default on the country's external debt by any means necessary. And it's a lot of debt — about $123 billion as of last month according to Bank of America Merrill Lynch. Oil is Venezuela's main export, and its low price has only made a terrifying situation much worse.
BAML analysts also calculated that if Brent oil prices level off at $25, Venezuelan GDP will hit about $80 billion, making its debt beyond onerous.
Executive Vice President Aristobulo Asturias Isturiz also recently reiterated that the country would do everything to avoid missing a payment even if “restructuring and refinancing” of debt is necessary.
However, analysts at Credit Suisse wrote in a note earlier this month that they weren't sure he would be able to keep that promise.
"In the absence of significantly higher oil prices, a liability management operation would likely be needed to prevent a credit event this year or next, in our view. Current market conditions and Venezuela's difficult economic and political situation could make this a challenging and expensive prospect, though," they wrote.
Venezuela managed to make a $1.5 billion payment in February at the expense, some analysts say, if the country's own people. The next payment analysts are watching comes up in October.
Until then everyone will be holding their breath, totally in the dark.
This article was originally published on Business Insider. Copyright 2016.
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