Today, a local newspaper revealed that the Government of Cuba has ordered its state-run power system to impose further reductions to electricity generation. The move comes as the most recent sign that a cash crunch that is exacerbated by the new sanctions that are imposed by the United States of America are taking an economic and human toll.
Invasor, the provincial Communist Party newspaper of Ciego de Avila, reported that local generation would be reduced by 10 percent in order to save fuel as part of a nation-wide reduction that was ordered on the 18th of April.
The report revealed that the reduction in fuel allocation for power generation started back in 2016. It says that it had so far spared the residential sector and essential services from blackouts, however, it also warned that it could change.
More than 95 percent of the electricity of the country is generated by oil-fired plants.
Majority of the business and infrastructure are owned by the state.
The paper said: “We are at a critical point, according to the electric union, and if at certain times of the day the fuel allocated for the day runs out, we will have to shut down some circuits.” It added that there are no programmed blackouts that are planned for now.
Last month, the United States started sanctioning companies and ships that are importing Venezuelan fuel to Cuba. Cuba barters medical and other assistance for the oil and will be hard pressed to look for an alternative given the cash crunch.
Raul Castro, the Communist Party leader, and Miguel Diaz-Canel, the President of the country, have both informed the National Assembly that the nation should prepare for hard times, however, they said that a more diversified economy implied that it would not be as harsh as the 1990s.
In the 1990s, Cubans suffered through years of daily blackouts following the fall of the Soviet Union, its former benefactor.
The foreign exchange earnings of Cuba that are used to purchase abroad more than 50 percent of the fuel it consumes, animal feed, food, and much more, have steadily dropped since 2015 when Venezuela, its strategic ally and oil supplier, started to implode.
The drop in key exports sugar and nickel, and the cancellation of a health services for cash deal with Brazil, have only worsened matters.
Foreign trade dropped by 25 percent from 2013 through 2017, with imports falling to $11.3 billion from $15.6 billion.