Cuba’s Energy Crisis Worsens and Overwhelms the Population

By Luis Brizuela (IPS)

HAVANA TIMES – Breakdowns at power plants, delays in maintenance works and fuel shortages are making Cuba’s energy crisis a lot worse, with blackouts being the most visible expression, a problem with no short-term solution that are hitting families hard.

“When the electricity cuts out, you have to invent ways to cook, with coal or wood; or sleep poorly the whole night with heat and mosquitoes, to then get up the next day and get the children ready for school and go to work. A lot of people are on the brink of a nervous breakdown,” Idalmis Ramirez told IPS via WhatsApp. She’s a mother of two young children and living in Cifuentes, in the central Villa Clara province, east of Havana.

In recent weeks, residents have taken to the streets in different neighborhoods, especially during the night, to show their unhappiness at constant blackouts, which are sometimes over 10 hours long in some places.

Blackouts have got worse during the scorching summer on this Caribbean island with 11.1 million residents, with temperatures over 35 degrees Celsius and where some citizens have taken vacations from work, are spending more time at home and demanding more electricity.

The electricity generation deficit has even resulted in blackouts during the day, for at least four hours, although the Cuban capital with 2.1 million residents, and many accumulated social problems, has been hit less than the other 14 provinces.

On Tuesday August 2nd, the Ministry of Labor and Social Security issued a series of measures that authorizes remote working, holidays, schedule adjustments, relocation and even suspended work, so as to reduce electricity consumption at state institutions.

In July, President Miguel Diaz-Canel made an appearance before the National Assembly of People’s Power, the local unicameral parliament, recognizing “the population’s understandable unease and insatisfaction,” and asked for citizens “understanding”.

The leader agreed that “there aren’t any immediate solutions… there are a series of negotiations to capture investments in what remains of the year, others are on the right path with renewable energy sources, but everything takes time, there are medium and long-term measures.”

“I understand that the government is asking us to save, but it should also recognize that regardless of the blockade – like they call the US embargo in Cuba – they haven’t anticipated investments in the sector properly,” electrical engineer Mauro Ricardo told IPS in an interview from Banes, in the eastern province of Holguin.

Ricardo believes “they should stop building hotels and invest more in power plants or other forms of electricity generation. There’s no point in having 80,000 rooms and tourists when half the country is in darkness and without services because there’s no electricity.”

In 2021, Cuba dedicated 35.2% of its total investment to business services, property and rentals, which includes tourist investments, compared to just 7.2% for the supply of electricity, gas and water, according to statistics from Cuba’s Office of Statistics and Information.

Cuban experts consider the structure of the country’s sectoral investment to be “deformed” in recent years, with more and more four and five-star hotels being built, despite low occupancy rates and the economic crisis and shortages of basic essentials, including food, getting worse.

Electricity in numbers

Approximately 95% of electricity in Cuba is generated by burning fossil fuels at a network of eight power plants that have been operating for over 30 years, on average.

These industries mostly process Cuban heavy crude, which contains a sulfur API of between 6-18 degrees, which requires more regular repair works, that are sometimes delayed because of funding.

Distributed across 168 municipalities, the National Grid is complemented with fuel engines and diesel gensets, which are also troubled because of shortages of spare parts, while the rest of electricity generation is made up with gas as well as national fuel, floating units, along with 5% of renewable energy.

Cyclical electricity generation crises paralyze industry and affect families who mainly use electricity to cook.

Since 2014, the island has invested over 500 million USD in boosting renewable energy sources, according to reports, and the plan is to bring up their presence in the National Grid to 37% by 2030.

Authorities in the sector have said that this transformation will require approximately 6 billion USD in investments, which is a challenging figure for a country with its main sources of revenue waning and soon having to resume interest payments on its debt with international creditors.

Add to this the effects of the embargo that Washington has imposed on Cuba since 1962, which hinders their access to credit and technology, makes freight to transport oil super expensive, pressuring investors to hold off investing and forces deprivation to create a climate for a social uprising, the Government says.

Complicated scenario

The energy crisis is getting worse at the same time the health scenario is getting more complicated, marked by a surge in dengue and COVID-19 cases, persistent inflation, food, and medicine shortages, as well as other problems that shape a troublesome political, economic, and social landscape.

“The reasons for popular discontent expressed by citizens on July 11, 2021, have become even more problematic, far from losing ground,” economist Omar Everleny Perez Villanueva explained to IPS.

Socio-economic reforms known as the Communist Party “Guidelines” received popular support in 2011 and laid down the groundwork to push for a model of socialist development and to steam ahead with modernizing the country.

However, Perez believes that “the Guidelines, updated in 2016 and 2021, aren’t doing anything right now and they are no longer talking about complying with them.”

Economists recommend passing an anti-inflation program, closing down or restructuring over 400 state-led companies that have reported losses, and breaking down barriers for the private practice of professions whose contributions could benefit the State budget via taxes, as well as other proposals.

This goes hand-in-hand with appeals to finalize the currency reform process that began in 2021, eliminating the division of consumer goods and dual currency and exchange rates, making the Foreign Investment Act (2014) more attractive, and to double down on reforms in agriculture in a country that imports 70% of the food it consumes.

In April 2021, during the keynote speech at the VIII Congress of the Cuban Communist Party – the only legal party – the former president and First Secretary of the organization up until then, Raul Castro, said that “we can’t pass boundaries” linked to private commercial imports and the independent practice of some professions.

Castro argued that “the consequences would be irreversible and would lead to strategic mistakes and the very destruction of socialism, and herein national sovereignty and independence.”

On July 21, 2022, Deputy Prime Minister and Minister of Economy, Alejandro Gil, addressed Parliament and stressed that “it isn’t convenient right now” to legalize imports of a commercial nature by private persons, despite unsatisfied demands on the national market.

Gil himself announced a series of measures to lawmakers that will seek to revive the economy, even though economists believe they fall short or are hard to implement bearing in mind that many of them don’t explain how they should be implemented.

After over a year-long suspension, Cuba’s Central Bank began buying USD from individuals again on August 4th, at an exchange rate of 120 Cuban pesos to 1 USD, while the State business sector will keep the 24×1 exchange rate, and the sale of USD on the official exchange market is still deferred.

Experts underline the possibility of higher inflation, a greater devaluation of the Cuban peso and a further reduction in the purchasing power of wages and pensions in Cuban pesos, which will mean quite a lot of families will need to buy foreign currency on the illicit market to satisfy their consumer needs.

More relaxed Customs regulations and lower duties will come into effect on August 15th for non-commercial imports by individuals.

Perez Villanueva believes that allowing imports of a commercial nature with their corresponding duties “would save the State the need to spend foreign currency to buy them abroad. As the goods and services supply grows, prices will tend to drop and benefit the general population.”

He recalled that many people are importing privately, but end up selling them at certain retail establishments.

The expert insisted that “a lot of capital is needed to resolve the electricity crisis and I don’t know how this will happen; a lot of capital needs to be injected to get rid of these blackouts that are the bane of the Cuban population’s existence.”

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