HAVANA, Cuba – One Friday last month, the tables outside Oishi’s food booth at Pabellon Cuba, an exhibition hall in central Havana, were filled with diners eating burgers and pizza.
The stand looked like a well-stocked oasis, but owner Miguel Salva, 46, with a phone glued to his ear, looked like a broker in the midst of collapse.
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“The fuel crisis has been a nightmare for us,” he said after hanging up the phone.
Since the United States under President Donald Trump imposed an oil blockade on Cuba in late January, power outages and fuel shortages have taken a staggering toll on small family businesses like Salva’s.
Oishi’s headquarters was once a restaurant in Regla, Havana, where an already long-term power outage extended to more than 15 hours a day.
Salva had a backup generator, but the numbers didn’t add up. Gasoline prices were around $1 per liter ($3.80 per gallon) earlier this year, but have soared to $10 on the black market. The surge follows the Cuban government’s decision in February to halt diesel sales and strictly ration gasoline as part of fuel-saving measures in response to the blockade.
“We had to close the restaurant,” Salva said. “I spent many days crying.”
Opposite Mr. Oishi’s food booth, Mr. Pincharte was selling fried rice and charcoal-grilled skewers. Unlike Oishi, Pincharte had no headquarters. It is a traveling job that involves transporting ovens and freezers from venue to venue using large diesel-powered trucks.
“Without fuel, our expenses increased eight times,” said co-owner Elianis Aguero, 31. “There is no profitable business to rely on fuel at this point.”
This year, both Pinciarte and Oishi plan to pivot to renewable energy, investing in solar panels and electric vehicles.
However, with the increase in demand, the price of electric three-wheelers has increased by 50%.
“This is going to be the year of resistance,” Salva said.
Shortages affect everyone in the private sector
“The oil blockade is affecting all of Cuba’s private sectors, from logistics and marketing to imports and exports and even production capacity,” said Eric Almeida, 41, president of Cuota, a consulting firm headquartered across the street from Pabellon Cuba.
Before the crisis, it cost between $100 and $150 to truck a container from the port to Havana. Now it costs $600.
“That cost makes the final product more expensive for the customer and holds up the entire commercial process,” Almeida said.
Quotas have also taken a hit as customers have been forced to cut back on non-essential spending, while others have simply shut down or refocused their businesses. Their quotas are far behind.
“We had to reorganize to survive,” Almeida said. He estimates that this year’s net profit will plummet by 50 to 60 percent compared to projections he made before the oil crisis.
The only silver lining is that the crisis has forced the Cuban government to loosen its grip on the private sector.
grow in crisis
Over the past three months, the Cuban government has instituted new regulations that provide more opportunities for the private sector in an effort to loosen historic centralism.
For example, increased tax exemptions were granted for the import of solar panels by all types of companies. It also announced that all Cubans living abroad will be able to open small and medium-sized enterprises (SMEs) on the island. Previously, that right was reserved only for those living in Cuba or those with “valid migrant residence rights” requiring a cumulative stay of 180 days or more in Cuba.
Similarly, rules regarding the sale of agricultural products have been relaxed. Previously, this could effectively only be done through state-run collection companies. The private sector is now allowed to invest in the distribution chain.
But perhaps the most important change came in March with a new law authorizing mixed limited liability companies, allowing private capital to merge with state-owned companies for the first time.
The changes will open the door for the private sector to invest in industries historically controlled by the government, such as sugar and mining valuable minerals. But health care, education and the military remain off-limits.
After decades of operating a largely state-run, centralized economy, Cuba began to develop a private sector in the 2010s. It really gained momentum in 2021 when the government allowed the creation of micro-enterprises, or small and medium-sized enterprises, to find a way out of the economic crisis and shortages caused by escalating U.S. sanctions and the coronavirus pandemic.
“Small businesses have emerged in the context of a crisis within a crisis,” Almeida said.
In the years that followed, the private sector overcame a government that vacillated unpredictably between flexibility and control.
“Entrepreneurship in Cuba lies between the swords of Damocles,” Almeida said. “The internal sword is bureaucratic practices and slow pace; the external sword is the oil blockade and US sanctions that prevent access to the international financial system.”
Currently, around 10,000 small and medium-sized enterprises are active, which is a major boost to the country’s economy. Cuban economist Ricardo Torres Pérez said in a September report based on official data that the private sector accounts for 15% of GDP, 31.2% of domestic employment, 55% of retail sales and 23% of state tax revenue.
Cuba’s private sector has grown “based on resilience, resistance and creativity,” Almeida said.
“Minimal” fuel imports
On February 6, the Cuban government authorized private companies to import fuel that had previously been reserved for the state. A few weeks later, the U.S. Bureau of Industry and Security followed suit, allowing the export of U.S. oil and gas products to eligible Cuban private sectors.
“Some private entrepreneurs are bringing fuel into the country for their businesses, and some are importing fuel for sale. But so far, the import volumes have been minimal,” First Deputy Minister of Energy and Mines Algerio Abad said at a press conference on March 20.
The numbers seem to match.
From February to March, the island’s private sector imported about 30,000 barrels (about 4.8 million liters or 1.3 million gallons) of fuel from the United States, according to Reuters.
Cuba needs about 100,000 barrels a day to power the grid and meet regular transportation demands, but production is only 40%, said Jorge Piñon, a researcher at the Energy Research Institute at the University of Texas at Austin. Essential services for residents rely solely on the state’s fuel supplies, which are currently being squeezed by Washington.
According to Almeida, importing a tank of about 25,000 liters (6,600 gallons) costs between $45,000 and $50,000, plus a 13 percent fee to the country’s importer and Union Cuba Petroleo, the only national agency authorized to handle the fuel.
Prices hover around $2 per liter ($7.6 per gallon), five times cheaper than the black market, making tanks still profitable for large-scale operations.
But it’s a very “volatile” investment, Almeida said. The Cuban government and the Trump administration are currently negotiating. If a deal is reached, the $2 per liter price would be higher than the standard price before the oil blockade.
But even if they were willing to gamble, companies like Oishi, Quota and Pincharte are effectively banned from supplying fuel.
They can’t afford to buy their own tanks. Under current regulations, companies cannot pool their funds to buy fuel, and purchases from other private small and medium-sized enterprises that already import fuel are still largely prohibited.
Over the last year, Pinciarte has been growing. Aguero planned to open new booths in multiple locations. Since January, her dreams of growing up have been dashed and she has instead settled for survival.
“This has been a very difficult year,” she said. “In any case, it will be very difficult for us in the private sector to survive.”
