Venezuelan President Hugo Chavez has said the Latin American state would allocate some $1 billion to maintain the country's energy sector and avert the threat of a devastating power collapse, a local newspaper has said.

Venezuela's energy industry faces serious problems due to last year's dry spell caused by low precipitation during the May-November rainy season. As a result of the drought, the water level at the Guri Dam, which produces 73% of the country's electricity, dropped 10 meters (33 feet).

Earlier, the state-run Corpoelec energy company said if the water level of the Guri water reservoir, located in Venezuela's largest Bolivar state, continues falling, the country's energy system could collapse as early as in May 2010.

In early January, Chavez urged the government to keep the water level at the dam from falling to a critical level that would cause its electricity-generating turbines to fail.

The Venezuelan authorities urged measures to reduce energy consumption in the country by 1700 megawatts, but have only managed to reach a 980-megawatt reduction.

Chavez was quoted by the Universal newspaper as saying the funds the country would allocate were to be spent on the development of 109 energy projects, including 59 in the sphere of power production and transmission.

According to expert estimates, some $18 billion is needed to meet the country's electricity demand.

MOSCOW, February 1 (RIA Novosti)