Cuba Turns to Private Businesses as Fuel and Food Shortages Worsen

Cuba has exhausted its reserves of diesel and fuel oil, the government announced this week. The development comes as the country faces severe shortages of food and fuel. Private businesses are playing a growing role in supplying daily goods to residents.

The private sector overtook state-run companies in retail sales for the first time in 2024. There are now more than 9,200 small and medium-sized businesses operating in Cuba. These enterprises have become a primary source for items including hot dogs, soap and other essentials as government food rations have diminished.

Juan Carlos Blain runs a restaurant and grocery business in Havana with four fast-food shops, two grocery stores and more than 100 employees. “I’m pretty tired, but I still have some strength to face any new changes,” Blain said. He has relied on solar cells, generators and batteries to keep operations running during frequent power outages.

The current fuel shortage has forced Blain to park his cargo truck and use an electric motorcycle to transport produce. “There’s no diesel anywhere and if it does show up it’s extremely expensive,” he said. ” Omar Everleny Pérez, the former director of the Center for Cuban Economic Studies at the University of Havana, described the situation as unprecedented in its severity.

“The economic situation has never been this hard. We’ve never had this many factors against us at the same time. Everything is paralyzed,” Pérez said.

This includes a de facto energy blockade and an executive order issued on May 1 that allows sanctions on foreign entities doing business in the island’s defense, mining, finance and security sectors. Canadian miner Sherritt International subsequently announced the shutdown of its nickel operations in Cuba.

A U.S. intelligence official visited Cuba this week, one day after the fuel exhaustion announcement, to emphasize the need for economic and political changes before any easing of pressure. The U.S. has permitted only one Russian tanker of crude oil to reach Cuba since January, when Venezuelan oil shipments were halted following the capture of Venezuelan President Nicolás Maduro.

Cuba’s economy has faced years of strain from U.S. sanctions, the loss of subsidized Venezuelan fuel, and internal mismanagement. The island began permitting independent contractors in the 1990s after the Soviet Union’s collapse. Small and medium-sized businesses were legalized in 2021.

Hugo Cancio, chief executive officer of Florida-based Katapulk, operates an online marketplace that delivers goods from the Cuban diaspora to the island. The platform carries 30,000 products and processes 1,500 to 2,000 transactions daily. John McIntire, chairman of the Cuba Emprende Foundation, said more than 13,000 people have completed its business training programs since 2012.

“All of our classes are overbooked,” McIntire said. Demand for such programs has grown even as more than 20 percent of Cuba’s population has left the country in recent years. Cuba’s government has made limited concessions to the private sector, including March measures allowing fuel imports by private businesses.

The country continues to face days-long power outages, regulatory shifts and chronic supply shortages.