Cuba orders extreme measures to cut energy use

11 Nov 2009 21:58:49 GMT
Source: Reuters
* Cuba's energy situation termed "critical"

* Some factories, workshops to be closed through December

* Most other economic activities to be reduced

By Marc Frank

HAVANA, Nov 11 (Reuters) - Cuba has ordered all state enterprises to adopt "extreme measures" to cut energy usage through the end of the year in hopes of avoiding the dreaded blackouts that plagued the country following the 1991 collapse of its then-top ally, the Soviet Union.

In documents seen by Reuters, government officials have been warned that the island is facing a "critical" energy shortage that requires the closing of non-essential factories and workshops and the shutting down of air conditioners and refrigerators not needed to preserve food and medicine.

Cuba has cut government spending and slashed imports after being hit hard by the global financial crisis and the cost of recovering from three hurricanes that struck last year.

"The energy situation we face is critical and if we do not adopt extreme measures we will have to revert to planned blackouts affecting the population," said a recently circulated message from the Council of Ministers.

"Company directors will analyze the activities that will be stopped and others reduced, leaving only those that guarantee exports, substitution of imports and basic services for the population," according to another distributed by the light industry sector.

President Raul Castro is said to be intent on not repeating the experience of the 1990s, when the demise of the Soviet Union and the loss of its steady oil supply caused frequent electricity blackouts and hardship for the Cuban public.

The directives follow government warnings in the summer that too much energy was being used and blackouts would follow if consumption was not reduced.

All provincial governments and most state-run offices and factories, which encompasses 90 percent of Cuba's economic activity, were ordered in June to reduce energy use by a minimum of 12 percent or face mandatory electricity cuts.

The measures appeared to resolve the crisis as state-run press published stories about the amount of energy that had been saved and the dire warnings died down. The only explanation given for the earlier warnings was that Cuba was consuming more fuel than the government had money to pay for.

The situation is not as dire as in the 1990s because Cuba receives 93,000 barrels per day of crude oil, almost two-thirds of what it consumes, from Venezuela. It pays for the oil by providing its energy-rich ally with medical personnel and other professionals.

Cuba has been grappling with the global economic downturn, which has slashed revenues from key exports, dried up credit and reduced foreign investment.

The communist-run Caribbean nation also faces stiff U.S. sanctions that include cutting access to international lending institutions, and it is still rebuilding from last year's trio of hurricanes that caused an estimated $10 billion in damages.

In response, the government has cut spending, slashed imports, suspended many debt payments and frozen bank accounts of foreign businesses. It reported last week that trade was down 36 percent so far this year due mainly to a more than 30 percent reduction in imports.