Cuba fuel sale restrictions spark rare taxi strike

Cuba's efforts to reduce fuel theft and curb a growing black market in gasoline and diesel triggered a rare strike by the island's taxi drivers last week.

"Fuel theft has been growing at a time when there is a shortage, and this fuel is being sold at prices below those of official outlets, with taxi operators being the main beneficiaries of the crime," an official of state-owned oil company Cupet told Argus today.

Cuba has a chronic fuel shortage made worse in recent years when close ally Venezuela started reducing preferential supplies.

The new fuel sale regulations, announced by the government in July and September 2018, mostly took effect on 7 December.

The taxi drivers reject the government's tightening of controls over how and where they purchase fuel. They also object to requirements that their vehicles – mostly worked-over iconic 1950s American cars that attract many tourists – are subject to periodic mechanical examinations.

Under the new rules, the drivers are also required to have bank accounts through which their purchases of fuel and spare parts can be traced. They are also to be given personalized magnetic cards to buy fuel from official outlets. This approach was recently implemented unsuccessfully by the Venezuelan government, where fuel is also hard to find.

A focus of the Cuban fuel problem is theft from government entities. "The taxi operators have been taking advantage of the lower prices they pay on the black market for fuel stolen from government facilities," a Caribbean diplomat in Havana tells Argus. "The government is losing revenue from this, but there is some doubt whether these latest measures will be any more successful than earlier ones."

Cuba imposed limits on gasoline sales in April 2017 to reduce consumption. Sales were restricted to all consumers except vehicles used in tourism, those operated by embassies and consulates and by foreign companies investing in the country.

"This measure backfired," the diplomat said. "It worsened the shortage of fuel required by the privately owned taxis, and fueled the black market that is being supplied with stolen gasoline and diesel."

The April 2017 measures were "temporarily successful," Cupet says. "But the volume of theft has worsened because it is now well organized in many parts of the country. Now it has to be stopped."

The government is countering the taxi strike by importing 400 minibuses and 50 buses by early January for the public transportation system in cities and among cities and towns, transport minister Adel Yzquierdo said.

Many of the vehicles are already on the way from China, the transport ministry said.

The island still has a fuel deficit "which is closing gradually," Cupet said, without giving any figures.

The island needs another 18,000 b/d to meet demand of 160,000 b/d and to stabilize the energy sector, Cupet said in October 2018.

According to data from Venezuela´s state-owned PdV, Cuba received around 50,000 b/d of crude and products from Venezuela in recent months. The crude is processed at the 65,000 b/d Cienfuegos refinery, and some is also believed to be resold in the market.

A cargo of Russian Urals crude passed through PdV´s leased Bullen Bay terminal in Curacao last week en route to Cuba.