Exclusive-Cuba seeks more electricity supply from Turkish powerships

[August 31, 2022]  By Marc Frank

HAVANA (Reuters) - Cuba, mired in an energy crisis that has brought frequent blackouts, is negotiating with a Turkish company to have it double the megawatts it currently produces for the country from shipboard generators just offshore, according to two people with knowledge of the discussions.

Cuban officials are in talks with Karpowership, one of the world’s largest operators of floating power plants and part of the Turkey-based Karadeniz Holding, the sources said. The company already has five ships operating off Cuba with a capacity of around 250 megawatts (MW).

The Communist-run country needs to generate more than 3,000 MW to meet minimum demand and currently is producing between 2,000 MW and 2,500 MW.

The Cuban National Electric Union did not respond to a request for comment. Karadeniz declined to comment.

The sources, who asked not to be identified due to the sensitivity of the negotiations, said the talks centered on how to ensure lease payments from Cuba.

"The (U.S. trade) embargo makes Western financial transactions very difficult and Cuba is cash short and behind on payments with many suppliers and joint venture partners,” one source said.

Experts say the Turkish company would need to add to its fleet off Cuba to produce the required amount of energy. Powerships carry their own generator fueled by oil or gas, anchor close to land and connect to the local electricity grid. They are leased by the host country.

The deal, if it moves forward, would provide quick and much-needed relief for the embattled Cuban government as power outages have spread across the island and increased in length.

Cuba is desperate for more electricity.

The energy crisis, with blackouts in 4 to 6-hour-blocks twice daily or more in most of the country, is perhaps the most painful symptom of a deeper financial crisis caused by external factors such as U.S. sanctions, the COVID-19 pandemic and poor economic management.

Cubans are also living through food, medicine and fuel shortages, forcing them to wait in long lines for the basics.

A Turkish Karadeniz Erin Sultan powership operates at Havana's bay, Cuba August 30, 2022. REUTERS/Alexandre Meneghini

There have been scattered, small protests this summer and U.S. authorities registered a record of more than 175,000 Cubans at the U.S.-Mexican border since October, according to U.S. Customs and Border Protection agency statistics.

Cuban power plants are obsolete, averaging 35 years of age, with a backup system of hundreds of smaller generators at least 15 years old. Just 5% of power comes from alternative energy sources.

The government blames lack of funds for its inability to update its decrepit grid, and says breakdowns, not fuel shortages, are the main cause of blackouts.

Energy and Mining Minister Livan Arronte Cruz said last week that the country hoped to all but eliminate blackouts by the end of the year, in part by adding “531 megawatts to generating capacity through new investments,” a figure reduced to 450 MW by President Miguel Diaz-Canel at the weekend.

Omar Ramirez Mendoza, deputy director of the state electricity monopoly, said on state-run TV that “240 MW {of the 450 MW} will come from mobile generation,” a euphemism used by officials to refer to the powerships and coinciding with the source accounts.

The remainder of the new capacity would come from upgrading existing facilities with the help of foreign partners in the Moa nickel region in eastern Cuba and at the Mariel Special Development Zone just west of Havana, Ramirez said.

Jorge Pinon, Senior Research Fellow at The University of Texas at Austin’s Energy Institute specializing in the Latin American region, said he believed the powerships would provide the "mobile generation" referred to by Ramirez, but wondered how the extra capacity would be financed “as the Cubans do not have any money.”

(Reporting by Marc Frank, additional reporting by Can Sezer in Istanbul, Editing by Dave Sherwood and Alistair Bell)

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