Venezuela's legislature gives initial approval to private investment in electricity sector

Venezuela's National Assembly on ​Tuesday initially approved a proposed reform which would ​open the electricity sector to private ‌investment, allowing the ​creation of joint ventures after nearly two decades of state control.

The bill is the latest effort by interim President Delcy Rodriguez, who took power in ‌January after the U.S. ouster of her predecessor, to open the country's economy to foreign and private capital, after changes to hydrocarbons and mining laws. The reforms are backed by the administration of U.S. President Donald Trump, who has said ‌his government will help revive Venezuela's economy to benefit both U.S. companies and Venezuelans. Venezuela's power sector faces a ‌severe crisis due to a lack of investment and maintenance, analysts say. Large parts of the country endure hours-long electricity outages, affecting water and telecommunications services. The lack of reliable power has also raised doubts among investors about whether they can move forward with proposed projects.

Lawmakers ⁠approved ​the 42-article bill after a ⁠first debate and must now hold a consultation period and a second debate in order to definitively approve the reform. The draft legislation, ⁠reviewed by Reuters, allows development of the electricity sector — including generation, transmission, distribution and commercialization — to be carried out by the state, ​joint ventures in which the state holds a 50% majority stake, companies in which the state has ⁠a minority shareholding and private firms.

"The establishment of any joint venture and the terms of its concessions will require approval from the President ⁠of ​the Republic," according to the explanatory statement approved during Tuesday's session. If approved, the reform would mark a significant overhaul of the sector, which was nationalized in 2007 by late President Hugo Chavez. In 2010 his government ⁠backed a law reserving electricity generation, transmission, distribution and commercialization for the state.

Under the proposal, joint ventures would have a ⁠maximum duration of 25 years, ⁠with a possible extension of up to 15 years. Ensuring a stable electricity supply is one of Rodriguez's top priorities, but the cash-strapped country has so far failed ‌to guarantee timely payments ‌to suppliers that could help revive it, sources told Reuters ​in May.

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