Marianna Parraga, Mircely Guanipa and Mariela Nava

When potential providers and financiers for Venezuela’s electric industry, including Siemens Energy and GE Vernova, held meetings with officials in Caracas in April, questions of how they might get paid to shore up the country’s deteriorated grid were top of mind, two sources involved in the talks said.

Those executives came away hesitant, the sources said, as the nation tries to jumpstart a USD100 billion reconstruction plan pushed by Washington.

Securing stable electricity is among interim President Delcy Rodriguez’s top priorities since she replaced deposed President Nicolas Maduro in January, but the cash-strapped country has so far failed to guarantee timely payments to suppliers that would help key industries - like its oil-and-gas sector - recover.

“I returned very skeptical from Venezuela,” said an executive from an equipment provider that worked with the government and state energy firm PDVSA, who attended one of the Caracas meetings. “The power plants have not been properly repaired in 10 years, so the needs are almost infinite. But they still have no clue on how we would get paid.”

Less than 40 percent of Venezuela’s generation capacity is currently available, leading to frequent outages and limiting the nation’s manufacturing capacity. The country’s thermal plants were expanded under late President Hugo Chavez through 2013, but the projects left billions of dollars in unpaid bills to contractors, some of whom are now being asked to return. A lack of clarity over which projects will be prioritized and supplies needed to reinforce the country’s transmission lines and fix its thermal and hydroelectric plants remains. That, coupled with uncertainties about payments and authorizations needed from Washington and Caracas, will delay investment, the sources said.

Venezuela’s communication ministry, state utility Corpoelec, and state-run oil company PDVSA did not reply to requests for comment.

Following the April meetings with foreign executives, Rodriguez’s government approached firms including Siemens Energy, GE Vernova and Mitsubishi Power about repairing the grid. Siemens Energy and GE Vernova confirmed meetings with government officials. “We are motivated to meet the moment in supporting the people of Venezuela,” a spokesperson for GE Vernova said. Mitsubishi Power did not reply to a request for comment. Of the 36,000 megawatts (MW) of Venezuela’s installed generation capacity, less than 13,000 MW are currently available, mainly due to the bad condition of its fuel-powered plants, which are only contributing some 2,500 MW, or about 13% of their capacity, according to independent data. Rodriguez has not elaborated on her plans, saying early efforts are focused on repairing two large thermal plants that have been underperforming for years.

“Solutions won’t come overnight,” she said last week in a rally in Valencia, one of many cities hit by frequent power cuts. The experience of multinationals from the Chavez era has made some wary about returning to Venezuela. Several companies who went unpaid filed for arbitration or resorted to legal action abroad after taking promissory notes Venezuela gave them instead of cash. Many traded those at large discounts.

None did further work in the ensuing years, in part due to US sanctions that are now being eased.

Rodriguez’s government recently rejected a proposal from a group of foreign firms seeking to be prepaid for initial repairs and spare parts, citing legal obstacles, according to the source.—Reuters