By Dalia Acosta
HAVANA, Feb 10 1999 (IPS)

Cuba’s energy sector, one of the most highly coveted by foreign companies, has just welcomed the first investment of purely foreign capital in the Caribbean nation.

The Panamanian company Genpower Cuba SA is financing the construction of a diesel-fuelled power station with the latest technology on Isla de la Juventud, an island located 110 kms south of Havana.

Mike Nahmad, the president of the Panamanian firm, told the weekly ‘Opciones’ that the power station was to have an operating capacity of 25 to 30 years, and that the equipment would be supplied and assembled by the German firm Man B and W and Telemania from Israel.

According to ‘Opciones’, construction has already begun on the plant, which is to start operating in late 1999, and is to meet almost all of the demand of the island’s roughly 100,000 local residents.

In the past eight years, the Cuban government has opened the country to foreign investment as one of its key strategies for reverting the sharp fall of the economy, which began in 1990 after the disappearance of the east European socialist bloc.

Today, 351 joint ventures are operating in Cuba, mainly in association with capital from Spain, Canada, Italy, France and England, according to sources with the Ministry for Foreign Investment and Economic Collaboration.

Minister of Foreign Investment Ibrahim Ferradaz said those five nations accounted for 80 percent of the joint ventures, which are concentrated in the basic industries and tourism.

Ferradaz said that two out of five joint ventures had been set up “since the approval of the (U.S.) Helms-Burton law,” designed to sanction companies from third party countries that do business with property in Cuba expropriated from U.S. owners since the 1959 revolution.

“There would be a heavier flow if there were no commercial and financial pressure by the United States on those interested in investing in Cuba,” said Minister of Economy and Planning Jose Luis Rodriguez.

In Rodriguez’ view, “Cuba is an attractive country for foreign investment due to its capacity to absorb foreign capital in accordance with the rules that we have implemented, without a disorderly opening, in those sectors which are of interest to us.”

Foreign investment complements Cuba’s own efforts, the minister underscored. “Cuban capital has accounted for 80 percent of the basic investment in our country,” he added.

Although the first joint venture with foreign capital was formed in 1988, with the Spanish hotel chain Sol Melia, not until today did the first investment with 100 percent foreign capital emerge.

The state-of-the-art electric company is to be built on the Isla de la Juventud due to the particularly poor state of the island’s old power stations.

According to ‘Opciones’, the power plants are no longer able to adequately cover the energy needs of the around 100,000 local residents of the island, nor of the industrial and tourist facilities located there.

The island has headlands and keys like Cayo Largo, which are already being exploited as tourist attractions, but whose potential should be boosted by the new power station.

Genpower executives say the total investment of around 15 million dollars should be recovered in around four and a half years through the sales of energy to the Cuban Electric Union.

After that period, the Union should become the owner of the power plant, and Genpower will be entitled to a share of the revenues.

But Genpower president Nahmad said his company was considering the possibility of reinvesting its profits in Cuba. He mentioned a possible mega-project in the energy sector – to the tune of around 150 million dollars.

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