By Dalia Acosta
HAVANA, Nov 23 2005 (IPS)

The Cuban government will implement new economic measures aimed at reducing energy consumption among some sectors of the Cuban population while counteracting growing social inequalities.

A hike in electricity rates – in this country where blackouts are routine – was announced Wednesday for households consuming more than 100 kilowatt-hours, together with a new raise in salaries and social assistance.

“The citizens of our country clearly do not care about electricity consumption, given its ridiculously low price,” reads a decree signed Tuesday by Cuban President Fidel Castro.

This is the first increase in the price of electricity since the early 1990s. Official sources say the price rise is justified because of the soaring oil prices on the world market and the depletion of energy sources.

The decree also highlights the need to bolster the incomes of people living on just their pensions or salaries, while criticising those who obtain “large cash incomes” by means of various forms of “illegal enrichment.”

It is hoped the measure will “encourage the low electricity consumption of those who already use it sparingly, and discourage the excessive consumption of those who waste it, regardless of their economic and social status,” according to the decree which was published in the official newspaper of the ruling Communist Party, Granma.

This is the first legal measure to be taken since the launch of a government campaign against corruption, misappropriation of state resources and other wrongdoing, announced by Castro on Nov. 17 as an all-out offensive to “save socialism” in this Caribbean island nation.

In practice, the price of electricity per kilowatt-hour will remain nine cents of a Cuban peso (less than one cent of a dollar) for the first hundred kilowatt-hours, and beyond that level of usage the tariff will rise in proportion to the extra consumption.

The average salary in Cuba is about 300 Cuban pesos (12 dollars). In the country’s complex monetary system, the convertible Cuban peso (CUC) is equivalent to 25 pesos, and can be exchanged for 80 cents of a U.S. dollar.

Households consuming up to 150 kilowatt-hours, which used to pay 20 cents per additional kilowatt-hour, will now have to pay 30 cents. And those households consuming more than 300 kilowatt-hours at the former rate of 30 cents will now pay a tariff of 1.30.

These rate hikes are most likely to affect a small group of private businesses such as family restaurants and other sectors of the population which the authorities have begun to classify as the “new rich.”

At the same time, however, the higher energy bills are likely to hurt a much larger number of typical families with three or four members, whose average monthly earnings of about 700 pesos (28 dollars) are barely sufficient to meet their basic needs.

“My parents used to pay 39 pesos and now they will be paying 99. They are retired and live with my brother, a university student, who doesn’t earn a cent. I’ve got my own family, so I can’t help them out,” Iván Rodríguez, a 28-year-old computer technician, told IPS.

And with respect to the government decision to raise pensions for the second time in a year, Rodríguez said they are still too low. “The cost of living is very high,” he complained.

In an attempt to improve conditions for the most vulnerable retirees, the government announced an increase in the minimum pension, from 150 to 164 pesos, which will benefit 762,433 people as of December.

Another government measure to go into effect will increase the pensions of 443,837 people now receiving 190 pesos, to 202 pesos. All social welfare payments will also be increased by 10 pesos.

The government has also decided to raise salaries in accordance with the complexity of the work performed, continuing a process begun in July in the health and education sectors.

According to the executive committee of the Cuban Council of Ministers, and the ministry of Labour and Social Security, the hikes in salaries, pensions and welfare payments approved this year have benefited 5.1 million people out of a total population of 11.2 million.

These measures represent 222 million pesos (8.8 million dollars) a year in additional spending by the state.

The announcement published by Granma points out that the new increases are being implemented “with a revalued national currency which has greater buying power, and without any adjustment of the exchange rate between the peso and the convertible peso.”

The text makes no reference to persistent rumours about a possible new hike in the exchange rate of the convertible Cuban peso against the U.S. dollar, which would affect many families who depend on remittances from abroad.

Cubans need convertible pesos to buy certain basic necessities such as some foodstuffs, hygiene products, clothing and footwear.

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