Cuba opens sugar sector to foreign management

Brazilian builder Odebrecht SA will begin administrating a Cuban sugar mill next week in the first sign the industry is ready to accept foreign participation since the 1959 revolution, two company sources said on Wednesday.

Odebrecht subsidiary, Compañía de Obras en Infraestructura (COI), is expected to sign the agreement with state-run sugar monopoly AZCUBA on Friday, according to the company sources and two diplomatic sources.

COI has been working in Cuba for a number of years building new port facilities at Mariel Bay, just west of Havana.

“Under the agreement we will manage the mill for 13 years, upgrade it and bring in new machinery for the harvest and cane transportation,” said one of the Odebrecht sources, who is an executive involved in the project.

“We start next week for this harvest that begins in December,” he said.

More than 170 million tonnes of sugar were produced worldwide in 2011. Cuba accounted for 1.4 million tonnes, or less than one percent.

Talks between potential sugar investors and the government have come and gone for years with few results.

At least three other companies are negotiating management agreements, according to two different company representatives.

Foreign capital and management know-how could help to revive a sugar industry that has collapsed from neglect and lack of investment in mills and plantations.

President Raul Castro, who assumed power from his ailing brother Fidel Castro in 2008, is trying to revive the country’s economy through reforms passed by the Communist Party in 2011 that call for more foreign investment.

Odebrecht said in January that it planned to enter the Cuban sugar industry, but one of the company sources said minor details had held up the project. He said that final Cuban government approval had just been granted.

“The company is already organizing, studying the plant and surveying plantations to increase productivity,” the general director of Brazil’s export promotion agency in Cuba, Hipolito Rocha, told Reuters, referring to the 5th of September mill in Cienfuegos province, around 100 miles southeast of Havana.

Rocha said an initial investment of US$60 million would be made in the pilot project. “Brazil can give a great deal to Cuba, a lot of technology, equipment and modern equipment,” Rocha said.

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