By Jorge R. Piñón *
Cuba´s Energy Crisis, Part II:  2006 —no more apagones? 

According to the U.S. Energy Information Administration (EIA), in 2002 Cuba´s installed thermoelectric production capacity stood at 4,354 Mw, generating some 13.920 billion kilowatt hours (Kwh) of electricity to cover approximately 13.7 billion Kwh of demand during the year. By mid-2005, however, the installed capacity of the island's active thermoelectric plants declined to 3,057 Mw. (1)

Moreover, Cuba´s deteriorated thermoelectric power plants currently provide no more than 2000 Mw, or about 65 % of installed capacity, even at peak performance levels. (2) Attested to by commonplace apagones , or widespread blackouts, the island's 11 million inhabitants make do with as little as 1500 Mw by the time inefficient plants and a dilapidated grid consume 25% of generated electricity. (3)

Cuba´s oil-fired system is made up of obsolete and aging equipment from the United States, the former Soviet Union, and Eastern Europe . The average age of the units is over 20 years, with some units surpassing 60 years of service. The newest units are located at the Matanzas, Felton (Mayarí), and Cienfuegos plants; these were built with Japanese, French, and Czech technology, respectively.

The distribution and transmission network, deteriorating due to lack of maintenance, consists of 6,816 Km of 220 and 110 kv transmission lines; 9,224 Km of sub-transmission lines to 33 kv; 33,400 Km of primary distribution lines; and 26,923 Km of secondary distribution lines.

Cuban power plants´ boiler systems have been retrofitted over the years in order to process the island's north coast´s heavy, high-sulfur crude oil as plant fuel. Some small hydroelectric capacity exists (43 Mw) in Manicaragua, along with approximately 800 Mw of seasonal biomass (bagasse) sourced electricity generated by the sugar industry.

 * Natural gas-fired joint venture with Sherritt Int´l Corp. of Canada

Sources: Cuban government data (cf. Granma , 28 Sept. 2004; 28 Jan. 2005); Sherritt International Corp., quarterly report, Aug. 2005)

While the Cuban electrical system has serious problems, additional generating capacity and repair and maintenance programs conducted in the second half of the 1990s have led to some growth. Cuba´s thermoelectrical power system experienced a 12% growth in generating capacity from 3.939 million kilowatts (Kw) in 1992 to 4.354 million kw in 2002. Thermal electric generation grew by 38%, from 9.8 billion kilowatt hours (Kwh) in 1992 to 13.4 billion Kwh in 2002; and consumption grew by 33%, from 10.1 billion Kwh in 1992 to 13.4 billion Kwh in 2001. At optimum conditions, Cuba´s electricity grid could theoretically serve over 90 % of the population.

Nonetheless, the Castro regime´s myopic strategic decision of switching from a fuel-oil fired system to the use of heavy, high-sulfur Cuban crude oil as a fuel source —promoted in order to save hard currency by limiting the import of fuel oil— has proven to be disastrous in the long term. Worn power plants, already in desperate need of modernization, have rapidly deteriorated by the burning of highly corrosive crude oil. The consequences of the Cuban government´s policy finally came to a breaking point in September 2004 when the Matanzas 330 Mw plant was shut down due to equipment failure. (4) This policy, if it continues, will eventually collapse the country into total darkness.

International oil trading sources indicate that Cuban state-owned enterprises, Cuba Metales and Cupet, and Venezuela´s PDVSA, are evaluating various alternatives by which they would replace the highly corrosive heavy sour Cuban crude oil as power plant fuel in exchange for medium sulfur residual industrial fuel oil. Among the options being considered are increased runs of heavy Cuban crude oil in a revamped Cienfuegos refinery; a crude oil for residual fuel oil exchange agreement; or a crude oil processing agreement whereby Cuba would export its crude oil from the Matanzas superport to Venezuela´s leased Isla Refinery in Curaçao, and for a fee Cuba would receive in return refined products.

As a first step necessary for any of these three options, Cupet and PDVSA recently announced the building of 600,000 barrels of residual fuel oil storage capacity at the Matanzas superport. This fuel switching strategy will allow Cuba to obtain much better performance (boilers/burners) from its electric power system, therefore eliminating much of the dreaded apagones .

The Cuban government is also spending some of its newfound capital —thanks in great measure to Venezuelan oil subsidies worth US$1.7 billion in 2005 alone (5) —in upgrading and repairing electric power generating equipment. Nevertheless, recent press reports show it will be an uphill and continuous battle against the constant deterioration and breakdown of the system.

Notes

1. Cf. Maria Julia Mayoral, "Detallada informacion al pueblo sobre los problemas en el servicio electrico," Granma , 22 Sept. 2004, [http://www.granma.cubaweb.cu/secciones/mesa/mesa379.htm]; Ramon Barreras Ferran, "En busca de la potencia instalada," Granma , 28 Jan. 2005, [http://www.granma.cubaweb.cu/2005/01/28/nacional/articulo09.html].

2. Maria Julia Mayoral, "Detallada informacion al pueblo," Granma, 22 Sept. 2004.

3. Cf. Maria Julia Mayoral and Anett Rios Jauregui, "Prioridad maxima a la recuperacion energetica," Granma , 27 May 2005, [http://www.granma.cubaweb.cu/2005/05/27/nacional/articulo04.html].

4. Cf. Dalia Acosta, "Return of Scheduled Blackouts Is Actually a Relief," IPS, Havana , 30 Sept. 2004, [http://www.ipsnews.net/africa/interna.asp?idnews=25685].

5. Danna Harman, "Chavez seeks influence with oil diplomacy," The Christian Science Monitor , 25 Aug. 2005, [http://www.csmonitor.com/2005/0825/p01s04-woam.html].

6. Cf. Carol Williams, "Heat Is On to Tackle Cuba's Power Crisis," Los Angeles Times , Sept. 3, 2005; Marc Frank, "Cubans await Castro's elusive Chinese kitchen," Reuters, Havana , 5 Sept. 2005; Frances Robles, "Blackouts in Cuba generate crisis," The Miami Herald , 15 Aug. 2005, [http://www.miami.com/mld/miamiherald/12384997.htm].

*Jorge R. Piñón is an international energy consultant with over 25 years of international downstream oil and gas experience at leading multinational companies such as Shell, Transworld Oil, Amoco, and British Petroleum. A Research Associate at the Institute for Cuban and Cuban-American Studies at the University of Miami , Mr. Piñón holds a degree in International Economics and Latin American Studies from the University of Florida .

**Second of a three-part series.

September 28, 2005
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