BUSINESSWEEK ONLINE: DECEMBER 18, 2000 ISSUE

International -- Spotlight on Venezuela

A Great Lake Fills with Filth...As Salt Seeps in from the Sea (int'l edition)

When explorer Amerigo Vespucci sailed into Lake Maracaibo 501 years ago, the Indian huts sitting on stilts in the water reminded him of Venice. The image stuck, and the country where Maracaibo is located was eventually named Venezuela--''Little Venice.'' But today, Vespucci might have a different metaphor for South America's largest lake, which is forested with oil derricks, crowded with tankers, and saturated with sewage and chemicals. ''The toxic level is incalculable and practically irreversible,'' says Jose Moya, president of environmental group Forja. ''It's a sad situation.''

Lake Maracaibo once was a pristine sanctuary for flamingos and mangroves-- until the 1920s discovery of oil in and around the lake. The result was an explosion in industry and population. Some 500 companies, including chemical refineries, tanneries, slaughterhouses, and coal mines, now dump wastewater into the lake. Pesticide-loaded farm runoff and oil bleeding from a pipeline often dynamited by guerrillas in Colombia also flow into the lake through its 135 tributaries. Most of the pollution, however, comes from raw sewage from 5 million surrounding inhabitants. ''The lake has turned into a free zone for contamination,'' says Sheila Vanegas, president of the Institute for the Conservation of Lake Maracaibo (ICLAM), a 19-year-old state watchdog group.

LEGAL TEETH. ICLAM officials say the lake could be cleaned up and turned into a water-sports and beach attraction, but it is slow going. Funds are scarce, since Caracas has never made the environment a priority. Two years ago, a Canadian study estimated it would take $1.145 billion a year for 10 years to nurse the lake back to health. But ICLAM lacks even the $32 million to finish building four sewage treatment plants.

Business has done little to help. Despite stiff laws, which mandate prison for polluters, only three companies near the lake have wastewater systems that comply with regulations. ICLAM lacks legal teeth to go after violators, and prosecutors rarely bother with environmental crimes. Activist Moya also points out that ICLAM directors have traditionally been political appointees with little interest in the environment. ''No one knows how much money the agency has invested in the lake, and one may ask where the results are,'' he says.

Cracking down also becomes a political issue when a major target is the government itself. The state-owned oil industry earns billions from fields in and around the lake, some of the Western Hemisphere's richest. Dozens of oil tankers ply the lake daily to pick up 78% of Venezuela's petroleum production, dumping ballast and other waste into the water, while more than 25 kilometers of seeping pipelines crisscross the lake bed. ''The state is one of the biggest violators, but it's untouchable,'' Moya says.

ICLAM's efforts, however, are starting to change attitudes. The agency reports that foreign oil companies are putting more safeguards in place, and Pequiven, the state petrochemical company, has almost finished an $82 million recycling system that will treat wastewater from homes for industrial use. More than 50 other companies have signed up for environmental audits. It's a start, albeit belated. Says Vanegas: ''The lake can't wait any longer.''

The freshwater lake also faces another problem: salinization. Seawater enters the lake through the narrow channel at its mouth, which was dredged in 1956 to allow tankers passage. But dredging also allows the heavier saltwater to seep in underneath the freshwater. Now, the salt is wreaking havoc on the lake's plants and wildlife--some species of fish are already dying out, say environmentalists--and making its way up tributary rivers.

State-owned Petroleos de Venezuela is considering several solutions, none of them cheap. One is to build a deepwater port in the Caribbean Sea so tankers do not have to enter the lake. Oil would be pumped to the port by pipeline. But the price could hit $1 billion. Other alternatives include allowing only smaller vessels, but that would raise costs, because more ships would be needed. Company officials say they're studying the matter, as they have been for several years. Meanwhile, the 20,000 fishermen who earn their livelihoods from freshwater catches wonder if the lake will die before a decision is hatched.

By Christina Hoag in Maracaibo





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A Great Lake Fills with Filth...As Salt Seeps in from the Sea (int'l edition)

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