Brazilian company to manage Cuba sugar refinery

Brazilian company to manage Cuba sugar refinery
By PETER ORSI | Associated Press – 22 hrs ago

HAVANA (AP) — Brazilian company Odebrecht said Thursday it will sign a
13-year contract this week to manage a sugar refinery in Cuba, where
President Raul Castro's government is trying to breathe new life into
the once-iconic crop that has fallen on hard times.

In a statement, Odebrecht said the deal would be signed Friday and
govern the administration of the September 5 mill in Cienfuegos province
by subsidiary Companhia de Obras e Infraestrutura. The aim is to boost
current output from around 30,000 tons to some 90,000 tons per harvest
through modernization of the plant.

"The objective is to recover agroindustrial capacity by improving the
productivity of the area planted with sugarcane," Odebrecht said in a
statement.

Odebrecht said the contract is the first of its kind signed between a
foreign firm and the island's Azcuba, a largely autonomous state-run
company that replaced the Sugar Ministry in late 2011.

Azcuba's creation was a key component of Castro's campaign to
decentralize the sugar industry in hopes of reversing a long decline
from the day when it accounted for 80 percent of Cuba's export income.

After peaking at approximately 8 million tons in 1989, sugar production
plummeted starting around 2002 amid rock-bottom international prices and
what analysts call a legacy of decades of mismanagement.

Officials shuttered nearly two-thirds of the island's refineries and
switched some 3 million acres (1.23 million hectares) of farmland to
other crops. Sugar production hit a 105-year low of 1.1 million tons in
2010.

Cuba sugar expert Frederick Royce noted that Brazilian equipment is
increasingly seen in island cane fields and refineries, and said
bringing Odebrecht on in an administrative capacity is a logical
extension of Castro's drive to separate the sugar industry from
government bureaucracy.

"As long as sugar was managed at a very centralized level of the
government, then it was one of many competing demands upon the
government for resources," said Royce, a professor of agricultural and
biological engineering at the University of Florida. "It could be that
bringing in partners to the management will require the Cubans'
higher-level decision makers to partition sugar off a bit, so it can
make decisions based on sugar income and profits in the sector."

One of Brazil's largest business conglomerates, Odebrecht is active in
the engineering, construction, petrochemical and chemical sectors. Its
Companhia de Obras e Infraestrutura subsidiary is also involved in a big
expansion project at the Cuban port of Mariel.

Odebrecht has made headlines in Florida this year for another
subsidiary's challenge to a law barring state and local governments from
contracting with companies that also do business in Cuba or Syria.

Coral Gables-based Odebrecht Construction Inc. argues the law is
unconstitutional because foreign policy is the exclusive province of the
federal government.

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Associated Press writer Stan Lehman in Sao Paulo contributed to this report.

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Peter Orsi on Twitter: www.twitter.com/Peter_Orsi

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