Cuba: Electricity rates increase but subsidies are maintained by the State Budget

Cuba: Electricity rates increase but subsidies are maintained by the State Budget
Fecha de publicación: 
12 December 2020
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Electric energy has a very high imported component and everything obtained by that route will be multiplied from day zero by the new exchange rate, which will lead to an increase in the cost of the kilowatt that the State Budget will subsidize with more than 17 billion pesos.

This was explained by Marino Murillo Jorge, Head of the Commission for the Implementation of the Guidelines, when referring to the new service rate, which, he pointed out, cannot be separated from the transformation of income.

He pointed out that of the 30 billion pesos dedicated to the consumption subsidy from the beginning of the monetary order, more than half will be destined to electricity, since the electric companies cannot assume the losses for this concept.

That amount, he said, represents between 45 and 50 percent of the electricity bill at the national level, that is, half of the energy that the population will consume will be paid for to the company by the State Budget.

According to Murillo Jorge, Cuba also cannot change the food cooking matrix, and if you make electricity extremely cheap, and liquefied petroleum gas - which is imported - extremely expensive, many people would abandon the latter option.

We are making a proposal to help maintain a balance and it should lead us to a tendency for people to use more renewable sources of energy, depending on the country's possibilities, for example solar heaters, he said.

He said that today a kilowatt costs 0.25 pesos and since the exchange rate will be 24, it will rise to 3.61, so 89 percent of customers will pay a subsidized rate.

This must be compared with income: a worker who lives alone and spends 100 kilowatts earns today the minimum wage of 225 pesos and as of January 1 it will be 2,100. Currently electricity represents four percent of income and in the new variant it will be 1.9 percent, he said.

Even with the price increase, in the first groups, the cost of electricity loses share compared to income, he added.

He also explained that the reading done from November 25 to December 25 is billed in January at the current rates, while the one done from December 25 to January 25 will be billed in February with the new costs.

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