Cuba opens state-run sectors to private firms amid severe shortages

Cuba has issued a decree lifting restrictions on several state-run economic sectors, allowing private firms to operate in areas such as gas distribution, electricity generation, waste collection, and the manufacture and sale of medicines. The move, announced on Wednesday, comes as the communist government grapples with acute shortages worsened by a U.S. fuel embargo.

The reforms target the most affected parts of daily life, including fuel and electricity shortages that have led to rolling blackouts and water cuts. Private companies will now be able to sell petrol, import and construct vehicles, and operate waste collection and recycling services—addressing piles of rubbish lining streets in Havana.

Health care, long a point of pride for Cuba's communist rulers, is also being opened to private firms. The decree allows private participation in the production and sale of medicines, though the government stressed that strategic sectors like education, telecommunications, media, and defence remain under state control.

Prime Minister Manuel Marrero said the changes would be implemented gradually, backed by the slogan 'change is possible.' He also announced that the first foreign investment project for fuel import, distribution, and marketing had been approved, without providing details.

Economist Daniel Torralbas noted that Cuban small and medium enterprises currently lack the financial capacity to invest in these sectors, implying that foreign capital will be necessary. The government's decision reflects an attempt to ease growing political pressure amid the island's worst crisis since the collapse of the Soviet Union.

Cubans, who once feared government reprisals, have begun openly criticizing leaders and participating in nightly pot-banging protests. The United States has effectively blockaded fuel imports for nearly six months, cutting off Venezuela as a primary oil supplier after taking control of its energy assets in January. This has led to at least five nationwide blackouts this year, with most parts of Havana having electricity for only a few hours daily.

Cuba's state electricity provider said it could generate only about 27% of expected peak demand on Wednesday, leaving a 2,380-megawatt shortfall. The reforms, while significant, are seen as a gradual step toward liberalizing parts of the economy, though the Communist Party retains tight control over key sectors.