Havana, Cuba – On a Friday last month, every table outside Oishi’s food booth in Pabellon Cuba, an exhibition venue in the heart of Havana, was packed with customers eating burgers and pizzas.
While the stand looked like an oasis of plenty, its owner, 46-year-old Miguel Salva, phone glued to his ear, looked like a broker in the middle of a collapse.
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“The fuel crisis has been a nightmare for us,” he said after hanging up.
Since the United States, under President Donald Trump, imposed an oil blockade on Cuba in late January, power outages and fuel shortages have dealt a staggering blow to small family businesses like Salva’s.
Oishi’s headquarters used to be a restaurant in the Havana municipality of Regla, where the already long blackouts have spiralled to 15 hours or more a day.
Salva had a backup generator, but the numbers did not add up: Petrol prices have surged from about $1 a litre ($3.80 a gallon) earlier this year to $10 on the black market. The spike followed the Cuban government’s decision to cancel diesel sales in February and strictly ration petrol as part of the fuel-saving response to the blockade.
“I had to close the restaurant,” Salva said. “I spent days in tears.”
Across from Oishi’s food booth, Pincharte was selling fried rice and charcoal-grilled meat skewers. Unlike Oishi, Pincharte never had a home base. It is an itinerant operation, hauling ovens and freezers from fair to fair in large diesel-powered trucks.
“Without fuel, our expenses have increased eightfold,” said 31-year-old co-owner Elianis Aguero. “Right now, no business is profitable if you depend on fuel.”
This year, both Pincharte and Oishi plan to pivot to renewable energy, investing in solar panels and electric vehicles.
But with demand rising, the price of an electric tricycle has jumped by 50 percent.
“This will be a year of resistance,” Salva said.
Scarcity affects everyone in private sector
“The oil blockade affects all of Cuba’s private sector – from logistics and marketing to exports and imports, and even productive capacity,” said 41-year-old Eric Almeida, president of Quota, a consulting company with headquarters across from Pabellon Cuba.
Before the crisis, trucking a container to Havana from the port cost between $100 and $150. Nowadays, it costs no less than $600.
“That cost makes the final product more expensive for the client and stalls the entire commercial processes,” said Almeida.
Quota has also taken a hit as clients are forced to slash non-essential spending, while others have simply closed or refocused their businesses. Quota is not far behind them.
“We have had to reorganise to survive,” Almeida said. He estimates that his net income this year will plummet by 50 to 60 percent compared with the forecast he had made before the oil crisis.
The only silver lining is that the crisis has forced the Cuban government to loosen its reins on the private sector.
Growing in times of crisis
In the past three months, the Cuban government has created new regulations to offer more opportunities to the private sector, in an attempt to loosen its historical state centralism.
It allowed, for example, greater tax exemptions for the import of solar panels by any type of business. It also announced that all Cubans residing abroad will be able to open small and medium-sized enterprises (SMEs) on the island. Until now, that right has been reserved only for those who live in Cuba or who hold “effective migratory residency”, a requirement that demands having accumulated more than 180 days of stay in Cuba.
Similarly, it relaxed the rules on the marketing of agricultural products. Before, this could practically only be done through a state-owned collection company; now, the private sector is allowed to invest in the distribution chains.
But what might be the most significant shift came in March with a new law authorising mixed limited liability companies, allowing private capital to merge with state companies for the first time.
The change opens the doors for the private sector to invest in industries historically controlled by the government, like sugar and precious mineral mining. Health, education, and the military remain off limits, however.
While Cuba has operated for decades with a predominantly state-run and centralised economy, its private sector began to develop in the 2010s. It gained real momentum in 2021, when the government permitted the creation of smaller-scale businesses, or SMEs, as it looked for a way out of the economic crisis and a goods shortage generated by escalating US sanctions and the COVID-19 pandemic.
“SMEs emerged in the context of a crisis within a crisis,” said Almeida.
In the years that followed, the private sector weathered a government that swung unpredictably between periods of flexibility and control.
“Cuban entrepreneurship finds itself between two swords of Damocles,” said Almeida. “The internal sword is the red tape and the slow pace; the external one is the oil blockade and US sanctions, which prevent our access to the international financial system.”
Today, there are about 10,000 active SMEs, which represents a significant boost to the country’s economy. Cuban economist Ricardo Torres Perez, in a September report based on official data, said the private sector contributed 15 percent of GDP, 31.2 percent of national employment, 55 percent of retail sales, and 23 percent of state tax revenues.
Cuba’s private sector has grown “on the basis of resilience, resistance, and creativity”, said Almeida.
‘Minimum’ fuel imports
On February 6, the Cuban government authorised private companies to import fuel, previously reserved only for the state. Weeks later, the US Bureau of Industry and Security followed suit, authorising exports of US oil and gas products to eligible Cuban private sector entities.
“There are fuel imports by some private entrepreneurs who bring it into the country for their businesses and, in part, to be marketed. But the quantities imported so far are minimal,” said Argelio Abad, first deputy minister of energy and mines, in a news conference on March 20.
The numbers seem to agree.
Between February and March, the island’s private sector imported roughly 30,000 barrels of fuel (about 4.8 million litres or 1.3 million gallons) from the US, according to the Reuters news agency.
According to Jorge Piñon, a researcher at the Energy Institute of the University of Texas at Austin, Cuba requires about 100,000 barrels a day – and only produces 40 percent – to power its grid and meet the regular transportation demands. Essential services for the population depend entirely on the state’s fuel supply, currently strangled by Washington.
According to Almeida, importing a single tank of about 25,000 litres (6,600 gallons) costs between $45,000 and $50,000, plus 13 percent in commissions to the state importer and Union Cuba-Petroleo, the sole state entity authorised to handle fuel.
For large-scale operations, it is still profitable for a tank, since the price sits at approximately $2 per litre ($7.6 per gallon), five times cheaper than the black market.
However, it is a very “unstable” investment, Almeida said. The Cuban government and the Trump administration are currently holding negotiations. If they were to reach an agreement, $2 per litre of fuel would be expensive compared with the standard price before the oil blockade.
But even if they were willing to gamble, businesses like Oishi, Quota or Pincharte are effectively barred from fuel.
They cannot afford to buy a tank by themselves. The current regulation prevents companies from pooling together to buy one, and even buying from other private SMEs that are already importing fuel remains largely prohibited.
Last year, Pincharte was growing. Aguero was planning to open new booths in several locations. Since January, her dreams of growth have shattered, and she has settled for survival instead.
“This year has been very challenging,” she said. “One way or another, it’s going to be very hard for us in the private sector to stay afloat.”
