By Luciano Costa

SAO PAULO, April 12 (Reuters) - When Venezuelan President Hugo Chavez inaugurated a high-voltage cable providing power to neighboring Brazil in 2001, the leftist leader hailed it as a step toward regional integration that would spur development in South America.

Flanked by his Brazilian and Cuban counterparts, Chavez used the ceremony in the border town of Santa Elena de Uairen to stake Venezuela's claim for membership of the Mercosur trade bloc grouping Brazil, Argentina, Uruguay and Paraguay.

Sixteen years later, Chavez's successor Nicolas Maduro is beset by opposition protests, the country has been suspended from Mercosur for violating its democratic charter, and its Socialist-run economy is on the brink of collapse.

The deepening crisis threatens to plunge Brazil's remote northern-most region, now reliant on Venezuela for much of its electricity, into darkness.

Roraima - known for the thick Amazonian rainforest that carpets the state and the table-top mountain that inspired Arthur Conan Doyle's story "The Lost World" - gets much of its power from the cable stretching 680 km (420 miles) from Venezuela's Guri hydroelectric dam.

Residents say power cuts are becoming increasingly frequent and prolonged, causing damage to machinery and discomfort to the 500,000 inhabitants of the tropical region where temperatures average 26 degrees Celsius (78.8°Farenheit).

Power supplies have been disrupted in the past due to lack of rainfall at the Guri dam but this time the problem is different.

"They just don't have the resources," said a Brazilian official with knowledge of the situation, who asked not to be identified because of its sensitivity. "They are not doing any maintenance on the power line, so the connection keeps falling."

Years of turmoil in Venezuela have shrunk its oil industry, the bedrock of the economy, leaving companies struggling to pay for essential imports like food and medicine.

Having promoted South-South trade for years, the country now owes billions of dollars to commercial partners, including in Brazil.

The power cable - which stirred controversy by running through an indigenous reserve and nearly doubling its initial $200 million budget - provides valuable hard currency for Venezuela, an OPEC nation that is also struggling with low global oil prices.

But, with supply continually interrupted, Brazilian authorities are starting to look for alternatives.

"If we just sit here with our arms folded, the state of Roraima will slip into darkness," local congressman Izaias Maia warned the state assembly last month, saying the cable was operating at just 2 percent of its capacity.

Venezuela´s government did not respond to emails seeking comment.

INVESTMENTS SUFFERING

The cable brings power to Boa Vista, the capital of Roraima - the only one of Brazil's 26 state capitals not connected to the national grid.

Karen Telles, technical coordinator of the Industrial Federation of Roraima (FIER), said the worsening power cuts were harming economic activity and discouraging businessmen from investing.

"One day this week we had three power cuts in 10 minutes," Telles said. "Imagine the impact on an industrial plant. There is a reluctance to invest in machinery - things which could improve production - because you could lose the equipment."

Brazil's Energy and Mines Ministry has established a working group to analyze ways to improve the reliability and efficiency of power supplies to the region.

Data from the National Agency of Electrical Electricity (Aneel) showed the power supply in Roraima - already amongst the worst in Brazil - was already deteriorating sharply last year.

The duration and frequency of power cuts rose by 66 percent and 57 percent respectively in 2016, versus the previous year. Figures for 2017 are not yet available.

Brazilian power companies Alupar and Eletronorte, a unit of state power holding Eletrobras , won a tender in 2011 to build a power line to connect Roraima to the national grid but construction has not started because of problems with the environmental license.

The federal government wants Roraima to be able to use the hydroelectric power that makes up two-thirds of Brazil's production - rather than relying on the supply from Venezuela or local thermal plants, which are expensive and polluting.

Eletrobras President Wilson Ferreira Jr said that if it receives environmental approval, the state company may have to go it alone as Alupar no longer considers the project financially viable.

"This line is extremely important and our partner has pulled out of the project ... Probably it will done by us at Eletrobras alone," he said.

(Additional reporting by Brian Ellsworth in Caracas; Writing by Daniel Flynn; Editing by Frances Kerry)