Cuban Government Seeks New Players to Tackle the Energy Crisis

The severe energy crisis plaguing Cuba, resulting in daily blackouts and significant challenges in securing fuel, is pushing the government to explore new economic partners and management strategies to sustain key sectors of the nation.

In a televised appearance on Friday, Miguel Díaz-Canel indirectly acknowledged the gravity of the situation by revealing that only one oil tanker has arrived on the island in the past five months. He attributed this predicament to what he called the "criminal energy blockade" by the United States, admitting its detrimental impact on the national economy.

This admission marks one of the most straightforward acknowledgments by the leader regarding the fuel shortages affecting the country, as power plant breakdowns, a lack of energy generation, and diesel shortages have led to widespread power outages across the island.

Economic Overhaul to Address the Crisis

Facing such challenges, Díaz-Canel asserted that the government is committed to transforming the economic model to welcome new participants in critical areas essential for the nation's recovery.

In the energy sector, he emphasized that accelerating the development of renewable energy sources is a priority to lessen dependency on imported fossil fuels. "A key focus has been promoting the use of renewable energy sources across various sectors," he stated.

He also announced a push for electric mobility, both through the importation of equipment and by manufacturing and assembling them domestically. "We are committed to increasing electric mobility, both through the import of electric equipment and by assembling and manufacturing various types of equipment here in Cuba," he noted.

These declarations come amidst a critical situation in the national electricity system, characterized by generation deficits frequently exceeding half of the national demand and an increasing reliance on fuels that the country struggles to import due to a lack of foreign currency.

Renewable Energy and Economic Reforms

Since February, the government has allowed the direct sale of energy generated by companies and individuals, with a rate set at 90 CUP/kWh for producers of renewable sources.

Cuba currently has 49 solar parks connected to the National Electric System (SEN), with capacities ranging from 900 to 1,000 MW. The plan is to expand to 92 parks by 2028, supported by a Chinese donation exceeding 114 million dollars.

However, energy expert Jorge Piñón warned on Friday that the situation is unlikely to improve in the short term, with 10 to 11 thermoelectric units out of service, nearly 60% of the 19 units across the country's eight plants.

On May 14, a record deficit of 2,174 MW was reported, with only 976 MW available against a demand of 3,150 MW, leaving 70% of the country without electricity simultaneously.

Broadening Economic Participation

The official response to the crisis extends beyond the energy sector. As part of the Economic and Social Program planned for 2026, Díaz-Canel announced a series of transformations aimed at increasing economic flexibility and expanding the role of various productive actors.

Among the significant measures is the strengthening of municipal autonomy, enabling territories to directly manage exports, imports, investments, and local development projects.

The leader also mentioned increased powers for state enterprises, allowing them to engage in foreign trade operations, directly participate in the currency exchange market, and form associations with other economic entities.

Notably, there is an intention to increase the economic involvement of Cubans residing abroad. According to Díaz-Canel, the new regulations aim to allow them to invest on equal terms alongside state companies, cooperatives, small and medium-sized enterprises (SMEs), and foreign capital.

The government also plans to expedite the approval of foreign investment projects and remove bureaucratic obstacles to attract capital.

The measures further include incentives to boost agricultural production, reduce idle land, and facilitate partnerships between state and private producers.

In the tourism sector, severely impacted by declining visitors and the departure of some international hotel chains, Díaz-Canel acknowledged the need to explore new strategies. Consequently, the regime aims to promote real estate and tourism ventures with new partners and economic players to maximize existing infrastructure.

The proposals also include relaxing permitted activities for SMEs, expanding opportunities for economic partnerships, and enabling direct export and import operations without mandatory intermediaries.

Additionally, he announced the continuation of a policy to replace general subsidies with targeted assistance for vulnerable individuals. Concurrently, a reduction of ministries, positions, and administrative structures is planned, aiming to cut expenses and allocate more resources to social programs and future salary reforms.

Although Díaz-Canel presented these measures as part of a strategy to overcome current challenges, they are introduced in a context marked by a deep economic crisis, recurring blackouts, fuel shortages, inflation, and a worsening standard of living for the Cuban population.