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.



___



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



___



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



http://news.yahoo.com/brazilian-company-manage-cuba-sugar-refinery-193945332--finance.html;_ylt=A2KJ3CdJap1Q70oAeBrQtDMD