Cuba: Odebrecht seeks production boost in $120mln sugarmill contract

Cuba Standard

CUBA STANDARD — The Grupo Odebrecht subsidiary that committed to operating a sugarmill in Cienfuegos province for 15 years has ambitious plans, official Website Cubadebate reported.

As part of a production administration agreement with state holding Azcuba, Companhia de Obras e Infraestructura (COI) wants to boost sugar production from currently 40,000 tons a year to 150,000 tons at the 5 de Septiembre mill, a local administrator told Cubadebate. COI plans not only to manufacture sugar at 5 de Septiembre, but to feed electricity to the national grid, as well as to produce ethanol, if approved by the Cuban government.

Ethanol production has been a taboo in Cuba, since Fidel Castro declared a decade ago that it reduces food safety and affects the poor.

The main objective of the agreement with COI is to transfer technology, Luis Armando Sarría told Cubadebate. “The Brazilians will bring to 5 de Septiembre the technology they have developed in the nine sugarmills that belong to Odebrecht Agroindustrial in Brazil.”

The $120 million agreement is not a joint venture, Sarría emphasized. COI will manage a company that continues to be 100-percent Cuban-owned and does business in non-convertible pesos. This arrangement, and the fact that the mill was built after the revolution, helps Odebrecht circumvent some of the problems associated with claims of pre-revolution owners.

Neither side has spelled out details of the contract. As part of COI’s plans to boost sugarcane production and to generate electricity, major investments in irrigation, harvesting machinery and boilers will be necessary.

COI is planning for two stages, Sarría said. In a first stage through 2017, the company aims at getting the sugarmill to reach its current design capacity. In the second stage, through 2021, COI plans to expand the facility, boosting production to 150,000 tons of sugar.

The 5 de Septiembre produced just 28,000 tons of sugar in the best of the past five years. The mill operators expect to manufacture 40,000 tons in the current harvest, with sugarcane coming from as far as neighboring Matanzas province.

COI is aspiring a sugarcane yield of 10%. If that goal is reached, the mill will need 1.5 million tons of sugarcane, cultivated on 28,000 hectares near the plant, to produce 150,000 tons of sugar.

A bagasse-fueled power plant will require operating the plant on 200 days a year instead of currently 150 days, Sarría said. At its nine sugarmills in Brazil, Odebrecht Agroindustrial generates the equivalent of 30% of the energy Cuba currently consumes.

Expectations for the Brazilian involvement “are great, not only here but in all the country’s sugarmills,” Sarría said, adding that 5 de Septiembre and COI officials are giving presentations at local vocational schools. The partners are planning to establish a training center for the province that will introduce GPS-based methods to sugarcane cultivation, as well as a teaching and research center at the University of Cienfuegos.