Month: October 2024

On 20 October 2024, Management reported on the collapse of Cuba’s electrical system and the (then) projected landfall of hurricane Oscar on the North-East coast of Cuba. Below, an updated report.

Electricity Restored

As reported in the international press, Cuba’s entire electrical grid collapsed on Friday 18 October 2024.  The national grid was restored on Tuesday afternoon, in the fifth day of the crisis.  The entire population of the island and all businesses were affected by the outage, as were many other public services such as the supply of water and access to telecommunication services.

As previously informed, the Miramar Trade Center and the hotels in Havana, Varadero and Trinidad in which the Company has an interest were amongst the least affected and were all able to maintain principal operations, with limitations, thanks to installed back-up generators and – in the case of the Meliá Trinidad Península Hotel – solar panels and battery packs that make this hotel nearly self-sufficient.

Power from the grid was restored to the Miramar Trade Center and the Meliá Habana Hotel early on Monday morning, 19 October 2024, and to the Varadero Hotels and the Meliá Trinidad Península Hotel on Tuesday, 20 October 2024. We believe the managers of the hotels and hotel staff, as well as the joint venture companies, did a commendable job in maintaining as many services as possible and minimizing the impact of these difficult circumstances on the experience of hotel guests and clients of the Miramar Trade Center.

Notwithstanding the above, recent events have made it clear that Cuba’s electrical infrastructure is in a precarious state. Generation capacity is significantly below the total demand of the country and major investments are needed to maintain, modernise and increase the capacity of the existing infrastructure. In the immediate aftermath of the crisis, the Mexican government has expressed its willingness to provide technical support, and China is involved in large-scale projects for the installation of solar farms to add 1,000 MW of capacity by the end of 2025 and another 1,000 MW by 2031.

Hurricane Oscar

In addition to the failure of the electrical grid, the eastern extremity of the island was impacted by serious flooding resulting from hurricane Oscar, which entered the island as a category 1 storm.  The Cuban authorities have so far reported 7 fatalities from the storm, primarily as a result of flooding, as well as economic damages to infrastructure and the agricultural sector. Some areas remain unreachable so the full magnitude of damage has not yet been assessed. The hurricane did not have any impact on assets of the Company.

Power Outage

As reported in the international press, Cuba’s entire electrical grid collapsed on Friday 18 October 2024, twice again on Saturday and a fourth time on Sunday, as attempts were being made to reconnect the grid. The resulting nationwide blackout, now heading into its fourth day, has affected the entire population of the island and all businesses, as well as many other public services such as the supply of water and access to telecommunication services.

According to our on-the-ground managers in Havana, the Cuban authorities have confirmed that the process of reestablishing the electrical system continues to be extremely complex.

The present crisis is a result of an unfortunate mix of factors, including fuel shortages, the recent passage of hurricane Milton, lack of maintenance and upgrade of existing power plants, deteriorating infrastructure, insufficient installed capacity, and rising national demand. The U.S. Cuban embargo complicates matters significantly, preventing the supply and transport of imported oil, equipment and spare parts, and triggering excessive price-hikes at a time that Cuba’s tourism sector continues to struggle to recover the number of tourist arrivals and related tourism income to pre-COVID levels. In any case, it is clear that significant effort and investment will be required over time to make the electrical grid more robust and reliable.

In the face of these difficult conditions, the Miramar Trade Center and the hotels in Havana, Varadero and Trinidad in which the Company has an interest are amongst the least affected and so far have all been able to maintain principal operations, with limitations, thanks to installed back-up generators and – in the case of the Meliá Trinidad Península Hotel – solar panels and battery packs that make this hotel nearly self-sufficient.

The ability of the properties to continue operating in this fashion will depend on the supply of fuel to continue running the on-site backup generators.

Hurricane Oscar

In addition to the failure of the electrical grid, it is likely that Cuba’s East coast will soon be impacted by hurricane Oscar, a category 1 hurricane that is expected to make landfall between Baracoa and Moa and will leave Cuba as a tropical storm in the North of the City of Holguín.

We sincerely hope that Cuba’s electricity company (Unión Eléctrica) will be able to rapidly restore Cuba’s electrical grid and that the impact of hurricane Oscar will be minimal.