Cuba's Energy Crisis Deepens as Venezuela's Oil Supply is Cut Off

The Cuban economy has faced a severe crisis due to the interruption of energy supplies and a shortage of foreign currency. Recently, nationwide blackouts have been recurring in Cuba, and the Minister of Energy stated that there is no diesel fuel at all. In particular, the imbalance in power supply and demand is intensifying, with blackouts lasting 20 to 22 hours a day in the capital.

Tourism Industry and Power Grid Stalled Due to Fuel Shortages

The energy shortage is also directly impacting the tourism industry, which is a major source of income for Cuba. According to released data, the number of Canadian tourists visiting Cuba in March this year was only 511, a 99.5% decrease compared to 98,600 during the same period last year. A major reason cited for Air Canada announcing the suspension of its flights to Cuba was a notice that aviation fuel could not be sold at Cuban airports.

The power supply situation has also reached a breaking point. During the peak hours on the evening of September 27, Cuba's required power was 3,500 megawatts, but the actual production capacity of the power plants was only 1,240 megawatts. With a power shortage of approximately 1,810 megawatts, the electric utility announced blackouts that cut off 50–60% of the required power. Furthermore, it was found that the Antonio Guiteras Power Plant, which has been in use since 1988, is producing only 200–210 megawatts, falling short of its designed capacity of 330 megawatts.

Structure of Dependence on Venezuela and the Aftermath of the Absence of a Sponsor Country

Cuba's energy crisis stems from an import structure heavily concentrated on a specific country. Cuba requires more than 100,000 barrels of crude oil per day, but its own production is at the level of 40,000 barrels, which is about 40% of the required amount. It has relied on imports for the remaining 60% of the crude oil, and 61% of the crude oil imported last year was from Venezuela. Cuba and Venezuela have maintained a special relationship, exchanging manpower support for crude oil supply.

However, following the change of regime in Venezuela this January and continued pressure from the United States, the supply chain collapsed. Along with measures targeting Venezuela, the United States has expressed its position to block oil supplies heading to Cuba. Accordingly, Mexico also suspended oil shipments to Cuba, making the supply and demand of crude oil in Cuba even more difficult. Currently, 9 out of 16 thermal power generation facilities in Cuba are unable to operate due to aging and maintenance issues, and diesel and heavy oil generators are also suspended due to fuel shortages.

Accumulated Debt and Pressure from U.S. Economic Sanctions

Economic financial difficulties are also hindering Cuba. Cuba has been unable to repay commercial loans since the mid-1980s, and despite receiving debt relief proposals from creditor nations such as Russia and the Paris Club, defaults continue. Recently, a London court issued a ruling ordering the National Bank of Cuba to pay damages regarding debts borrowed in the early 1980s.

The United States government is strengthening sanctions, claiming that the Cuban leadership is misappropriating resources regarding Cuba's energy crisis. Starting with the freezing of assets of the Cuban state oil company and limiting international transactions in June this year, the United States is expanding economic sanctions across various sectors, including mining, construction, military research institutes, and nickel companies.