Cuba to cut power, fuel on Venezuela concerns

OREANDA-NEWS. July 08, 2016. Cuba has ordered state agencies to reduce power and fuel use by about 50pc, a move officials say stems in part from uncertainty about the continuation of oil supplies from Venezuela.

The government is also concerned about the impact of increased power consumption over the past three years, without any expansion in generating capacity, officials tell Argus.

The cutbacks are intended "to avoid blackouts and problems for basic services," the island's vice president for the economy Marino Murillo said in a statement.The reductions will be in place "until there is an improvement in the economic situation," according to other officials.

Cuba produces around 50,000 b/d of liquids and 20,000 b/d equivalent of gas from onshore and shallow water reservoirs. The island also imports around 80,000 b/d of crude and products from Venezuela on preferential terms.

"There has been no reduction in the importation of oil, but it is accepted that the economic uncertainty in Venezuela poses a short-term risk for Cuba," an official of state-run oil company Cupet tells Argus. "This development is an immediate reaction to wider problems in the economy."

The order to reduce consumption follows widespread power cuts in the capital Havana over the past two weeks. Cuba's installed generating capacity totals 5,870MW, of which 3,200MW is operational, state-run power utility UNE says.

Power consumption was 19,366GWh in 2014, 1.1pc more than 2013, according to the latest available official figures.

Increasing electricity demand will not be satisfied in the short term, as significant relief is not expected until the commission of the first of three 200MW power plants in 2022. The plants will be constructed with a \\$1.3bn loan from Russia, and will burn diesel and natural gas.

Cuba has also been troubled by problems in two important export sectors — nickel, which has been hit by falling prices, and sugar, which has seen reduced production.

Cuban nickel output has declined from 65,000t in 2011 to 45,000t in 2014, according to the latest government statistics. The industry's problems have been compounded by falling prices, with export earnings falling from \\$1.4bn in 2011 to \\$795mn in 2014, the latest available official data say.

The island's sugar production in the 2015/2016 harvest was 19pc lower than the previous year's, according to an official statement.