6th October 2023
Cuba is facing a serious new fuel and power crisis with uncertain outcomes for the broader economy, according to senior ministers.
Speaking on the television programme Mesa Redonda on 27 September, the Deputy Prime Minister and Minister of Economy and Planning, Alejandro Gil, and the Energy and Mining Minister, Vicente de la O Levy, explained that because of shortages of imported oil and gas, nationwide blackouts are expected to increase significantly during October.
To address fuel shortages severe energy use restrictions will be placed on manufacturing, transportation, and electrical consumption. In addition, homeworking will be undertaken where possible, and university classes, sporting and other events postponed. The new measures come a time of continuing shortages of food, medicines, and hardship.
Country facing shortage of fuels
Explaining how government had over the past nine months been largely able to repair and bring back online Cuba’s aging and inefficient power plants, De la O Levy told viewers that the issues had now changed and “we have a situation with fuel.” “The main impact today is on diesel,” he said, making government’s first priority maintaining the supply of energy, especially diesel.
Speaking about its supply, the Minister noted that Cuba consumes about 120,000 to 130,000 tons per month of diesel, all of which is having to be imported to enable the economy to function. Diesel, he said, provides for electricity generation, as well as lubricants and greases and domestic fuel consumption. The rising world price, shortages of foreign exchange, and the reluctance of some suppliers to deliver because of sanctions had, for Cuba, he said, made resolution of the supply situation more complex.
In his remarks, De la O Levy also indicated problems with the supply of fuel oil. Noting that in the past fuel oil problems had been solved at much less cost by refining heavy crude in the country’s four refineries, he said that this had recently become more difficult. “Because the supply of fuel oil comes with poor quality from our suppliers, requiring us to mix it with good fuel oil, that takes days,” he said. We do not lack as much for fuel oil as diesel, “but we have been delayed by the problem of the mixture and the qualities,” he told viewers.
Noting the wider economic challenge fuel supply presented, the Minister said that the island must guarantee fuel for aviation at a cost of €30mn (US$32mn) a month. “But if we do not have fuel, we do not have aviation, and without that there is no tourism. You have to guarantee it,” he explained.
In his remarks De la O Levy also sought to reassure Cubans that the country had run out of fuel. “The country has never reached zero fuels. We know that there are queues, we are distributing a daily amount of fuel with a control in all the service centres, despite increasing consumption, he stressed
The Minister went on to explain the measures that would now be taken. Assuring Cubans that the present “tight situation” would be lifted, he said that in early October fuel shortages would cause cuts in power generation of “400 to 450 MW” causing “a blackout level of 700 MW maximum in the day.” “We’re not going to have the level of fuel we need or the level we had in previous months, but we’re going to raise distributed generation and supply to the economy” De la O levy said, indicating that government estimated that there would be a 140MW improvement when onshore gas offtake from onshore oil comes on-stream from Energas (Cuba Briefing 9 November 2023).
The Minister however warned that Cubans could expect power outages of up to eight to 10 hours a day starting in October, including in areas previously little affected beyond Havana, and that all Cubans should reduce their domestic consumption.
Severe economic and social impact likely
Also speaking on the programme, Deputy Prime Minister, Alejandro Gil, the Minister of Economy and Planning, indicated the seriousness of the situation now facing the island, and its likely wider potential economic and social impact.
“Yesterday there were important meetings of the country’s leadership with the authorities of the territories, in which they evaluated province by province how the measures are being implemented and what the results are, which also allowed for socialising the experiences.” “We are not at zero; We have restrictions, but we have a set of possibilities,” he said, seeking to reassure Cubans.
Then, indicating that the effects will be seen on daily life and stressing that “The economy is in a complex situation, with a supply deficit, inflation”, he went on to explain that some activities will be prioritised.
Observing that in addition to electricity generation, the highest consumption of diesel corresponds to agricultural activity and cargo and passenger transport, he said: “In these activities it will not be possible to maintain the same levels of weeks ago. Although we are not at zero some we will postpone.”
In his remarks Gil, sought to assure viewers that agriculture will be protected “as much as possible” because of its importance to the population, and because a good planting campaign had been achieved. “A tremendous effort has been made in planting, which we cannot lose now in the harvest,” he said.
in his remarks, he acknowledged however the worsening problems facing the country in the delivery of the basic subsidised guaranteed food basket. “We have had in the course of the year delays in deliveries, some products have not been able to be delivered on time. One hundred percent of the basket is imported. We have not been able to import coffee. The price of food on the international market has increased. There are countries that have imposed restrictions to export their products and guarantee their self-sufficiency.”…. “We don’t have credits to buy food. The current situation is complex, and, with a lot of effort, children’s milk is being guaranteed,” he said
Gil stressed that as far as possible, passenger transport, health services, water supply, and the transportation of tourists would be maintained, in the latter case because the sector represented a source of income for the country. He also noted the need to “eliminate meetings, lighten the burden of bureaucracy”, and emphasised that cost-saving measures were equally applicable to state and non-state entities. Gil noted too the need for officials to “reason and explain” to citizens the situation Cuba is in.
Speaking about the broader economic impact, he said that government had made projections about how in the coming weeks the cuts would affect Cuba’s provinces and how they would operate using the limited resources available. “It is difficult” he said, “we are planning at the point of a pencil” and have empowered some ministers to move resources to achieve overall priority objectives. “The way in which we have been working, in the constant exchange with the provinces, assures us that there is no disorder and that this process takes place in a coherent manner,” he noted.
Ministers seek to reassure Cubans
In an attempt to reassure Cubans, Gil said that that the main economic decisions were being addressed by government through “very collective management”. “The people,” he said, “must have confidence that the leadership of the country and the Government is working tirelessly to improve the situation. We are committed to working for the people.”
The country, he said, did “not have the foreign exchange to guarantee supply and reduce inflation and had less foreign exchange.” Inflation so far this year “exceeds 20%” he observed, while noting that currency circulating in the informal market was distorting the economy and work was required to correct this.
“We are living in complex moments,” he said “ but they are solved with understanding, with the support of the people. This moment requires an objective understanding and measures adjusted to the current context.”
Then in an apparent riposte to liberal reformers, and those in business in Russia and the US who envisage freeing Cuba’s private sector, Gil said: “An agenda of neoliberal measures is not in our equation. We have to overcome the complexity of the current context and we will move forward in the defence of our socialist model.”
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