Energy & Environment

Cuba’s Energy Revolution: First Steps for Global Investors

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As a lead-up to the Cuba Energy & Infrastructure Summit (Sept. 1 – 2, 2016)  in Havana, New Energy Events ran a highly informative webinar for investors interested in Cuba’s renewable energy sector.  The webinar featured the top persons and organizations actively involved in the business and investment scene in Cuba.  As an overall view to the investment climate in Cuba, the webinar speakers did an excellent job at “clearing the fog” on the actual process.

The webinar panel consisted of four experts actively engaged in Cuba.  Sharing their knowledge and experience were panelists Chris Bennett, Managing Director of the Caribbean Council (U.K.), Lee Evans, Senior Policy Advisor at Engage Cuba (Washington, D.C.), David Lenigas, Chairman of the Board at LCG Capital (U.K., Cuba & Canada), and Hermenegildo Altozano, Energy & Utilities advisor and partner at Bird & Bird Projects, a law firm based in Spain.

Judging the viewers’ stats, investment opportunities in Cuba’s renewable energy sector is of global interest.  The webinar presented a look at the impediments to investing, advice on beginning the investment and also the legal processes involved.

Overall, the Cuban sector has massive opportunities for investment, but it’s not as simple as one might think.  Rules need to be followed and expectations need to be somewhat tempered with a dose of patience and perseverance.  Yes, Cuba wants the foreign investment into its economy.  To make it easier for everyone concerned, a good starting place is Cuba’s “Portfolio of Opportunities.”

Mr. Bennett of the Caribbean Council organization has been providing services to large U.K. corporations (such as Virgin Atlantic and Imperial Tobacco) entering the Cuban business landscape.  He’s also responsible for leading trade delegations to Cuba since the 1990s.  He spoke of the business process in the context of the new Cuban economy.  “Cuba is a country of huge opportunity but also huge needs,” he said.  He emphasized the importance of finding an investment match and that without finding a match, there is no proposal.

From the American perspective, Ms. Evans of Engage Cuba, said U.S. investors are “restricted on many counts.”  Engage Cuba is an organization representing private business and State organizations seeking to lift the travel and trade ban against Cuba.  She said American investors have to go through a few extra steps to comply with current legislative restrictions.  What makes it particularly interesting is that the renewable energy sector is one of the sectors for investment permitted by the U.S. government.

Mr. Lenigas, already an investor in Cuba in the oil exploration, tourism, global consulting, sports, and solar projects fields gave some good advice. From the investor’s perspective, he stated that Cuba presents wonderful opportunities especially in the renewables and the energy sector.  But, he said, it’s more complicated than people think.  An investor, he said, needs to go through the right channels and they need to go to Cuba with a D7 visa.

For the last 20 years, panelist Hermenegildo Altozano has been advising companies on joint ventures with Cuba.  Yes, trading activities are becoming easier, he says.  He spoke about necessary first steps to investing in Cuba such as registering with the Cuban Chamber of Commerce in Havana.  He also advised searching the Cuban Portfolio of Opportunities to see if there’s a fit for an investor’s business.

He also gave a summary of investing in Cuba from the legal perspective.   He discussed at length non-disclosure agreements, power purchase agreements, investment protection, guarantees provided by Cuban investment law, Cuba’s membership in a number of investment treaties, corporate investor taxation and dispute resolution in relation to Cuban partnerships.  He, as all the panelists did, recommends investors not go alone to Cuba but visit with an official organization.

One of the major points to come out of the webinar was the value of an exploratory trip to Cuba.  Be warned though, just packing your bags and heading off, passport in hand, to Havana will most likely leave you a little disappointed from the business perspective. Guaranteed, you might get a nice sun tan, but you are not going to meet any heads of Cuban corporations or the government ministries.

A prospective investor needs to go with an organization that has the experience of doing this.  For Americans, Engage Cuba organizes these type of trade visits to Havana.  For Europeans, the Caribbean Council would be a good organization to connect with.

It’s also a good idea to connect with the people and companies already operating in Cuba. For anybody wishing to connect with an corporation already on the ground, David Lenigas’ people at LGC Capital are experts.

For legal advice, Mr. Altozano knows the joint venture process that comes with 20 years of direct Cuban experience.

The added benefit that comes from traveling or connecting with one of these specialist organizations is that they’ve done it before and have the connections needed to launch an investment or business idea.   Everyone will tell you they know so-and-so, but how far this will get you could leave you disappointed.  While there are many opportunities for investing in Cuba, there are necessary steps and channels to follow.  There are no shortcuts.

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