Cuba strapped for cash, acts to avoid power blackouts -economy minister

HAVANA, July 5 (Reuters) - Cuba faces a cash crunch and must ration energy in a bid to avoid blackouts and spare essential services, Economy Minister Marino Murillo was cited as saying by state-run media on Tuesday.

Cuban companies are already slashing work hours and limiting the use of air-conditioning and cars in order to save energy, workers say, adding they fear the situation will worsen.

Cuba has a history of energy rationing, especially in the 1990s after the collapse of the Soviet Union, when the Communist government struggled to survive under a severe U.S. embargo.

While the current restrictions will not be so severe, they come at a time when Cubans’ expectations are higher due to reforms and the detente with Washington.

“It is essential that we reduce spending as much as possible,” the Communist Party daily newspaper Granma quoted Murillo as saying during a meeting of the economic commission of the Assembly, which was closed to foreign journalists.

The austerity measures come as low global commodities prices batter Cuban exports of nickel, refined oil products and sugar.

While no statistics are available, revenues from the sale of professional services to oil-producing nations such as Venezuela and Angola, are also thought to have suffered.

Cuba has fallen behind on payments for imports in recent months, diplomats and foreign business people have said.

Murillo was quoted as saying his forecast for 2 percent economic growth this year was now in question.

“The most important thing will be to avoid effecting residential electricity consumption and in general basic services to the population,” the minister said.

The head of a joint venture, who asked to remain anonymous, told Reuters last week he had seen a government document ordering cuts in electricity and fuel consumption to most state-run companies and entities by 50 percent.

Cuban workers said they have been informed of the cuts.

“They called a meeting and said our summer hours were being cut as well as the use of our patrol cars,” said an employee of state-run security firm SEPSA, who asked that his name not be used out of fear of retribution.

The Communist Party weekly in eastern Holguin province, reporting on a meeting of top officials there, shed light on government plans for the rest of the year.

“During the meeting the adjustments to the economic plan for the second half of the year were explained,” Ahora reported. “Among them, the reduction of operations in dollars, and a reduction of the consumption of energy of 28 percent.”

Jorge Pinon, director of the Latin America and Caribbean Energy Program at the University of Texas, said Cuba’s energy woes were in part due to a sharp increase in consumption.

Energy consumption jumped more than 30 percent over the last five years due to the growth of small businesses and the rise of a middle class under President Raul Castro’s market-oriented reforms.

“This summer they are trying to insure the electric grid does not crash, and longer term, that they can handle increased demand from tourism and small business,” Pinon said. (Reporting by Marc Frank; Editing by Leslie Adler)