* Output was 1.51 million tonnes raw sugar * Production falls well short of forecast * Possible impetus for investment By Marc Frank HAVANA, June 17 (Reuters) - Cuban raw sugar production weighed in at 1.51 million tonnes this season, official media said at the weekend, 8 percent above the previous harvest but short of the 1.68 million tonnes forecast. Cuban television, reporting Sunday on a weekend meeting to review the harvest, blamed "obsolete mills and machinery" among other factors such as Hurricane Sandy and poor management, for the less than expected performance. "Mills opened and closed, opened and closed, opened and closed even though managers said they were ready for the harvest," Cuban Vice President Jose Ramon Machado Ventura told the meeting. Sandy also put a dent in the harvest before it began. The storm damaged mills and flattened cane in eastern Santiago de Cuba and Holguin provinces in late October. The two provinces produced 70,000 tonnes less than forecast before Sandy hit. The harvest runs from December through April, but often stretches into May and June. Only 8 of 56 mills in the country were built after the 1959 revolution, the last in the 1980s. Brazilian builder Odebrecht SA became the first foreign company since the revolution to produce sugar when it began administering one of the eight mills this year. Administration agreements with the other seven mills are now open for negotiations, according to the Cuban Chamber of Commerce. At least three other companies are negotiating management agreements, according to two different company representatives. "We hope this will push the Cubans to allow more foreign participation in the industry," said a representative of one of the companies, asking his name not be used. Theoretically, the state-run sugar industry has been open to direct investment since 1995, but in practice there has been little interest on the government's part except in a few joint ventures making sugar derivatives such as alcohol and parts used in sugar processing. A big obstacle is the U.S. Helms-Burton law, which penalizes investment in properties seized from U.S. owners decades ago. The law also contains a yet-to-be implemented section that would allow Cuban-Americans to sue investors who "traffic" in their expropriated properties. The Sugar Ministry was closed two years ago and replaced by state-run holding company AZCUBA, with subsidiaries in each province. AZCUBA hopes to reverse a long decline in output from 8 million tonnes in 1990, with plans to produce 2.4 million tonnes by 2015. Cuba consumes 600,000 to 700,000 tonnes of sugar annually and has a 400,000-tonne export agreement with China. Cuban sugar is also sold for export on the spot market. Cuba has not imported sugar for a number of years.