Government to change Prepa’s Fiscal Plan
SAN JUAN – The Puerto Rico Electric Power Authority’s (Prepa) fiscal plan, which the government has already presented to the Fiscal Oversight & Management Board, will be changed in the next few days, Gov. Ricardo Rosselló’s representative to the board, Elías Sánchez, assured.
Sánchez explained that the plan was prepared by former Prepa Chief Restructuring Official Lisa Donahue and her firm, AlixPartners, as well as the utility’s executive director, Javier Quintana, but the current administration wants to amend it to renegotiate a better restructuring agreement with the creditors of the utility’s $8 billion debt.
According to the public corporation’s fiscal plan, which was presented to the oversight board on Tuesday, the utility’s bondholders would see an 8% cut when taking into account the entire debt and not just what is insured.
“There’s always talk around here of a 15% cut, but Donahue’s negotiation was for half of the debt. AlixPartners’ negotiation contemplates a 15% cut to the uninsured debt, nothing more. Thus, when you consider the total debt, you get 8%. It’s not that the [Puerto Rico Fiscal Agency & Financial Advisory Authority] AAFAF reduced AlixPartners’ negotiation,” Sánchez explained as he closed the Private Enterprise and Government Forum held by the Puerto Rico Chamber of Commerce at the Condado Plaza hotel.
The current administration approached Prepa’s creditors to renegotiate part of the restructuring agreement that has been reached and was celebrated as an achievement by former Gov. Alejandro García Padilla’s administration.
“What we have done is request an opportunity to sit at the table with Prepa creditors, that they consider the scenarios presented, and see how we can improve Prepa’s offer, because we believe there is room to improve and to achieve a negotiation that is more feasible for them. I can’t talk about quantities, but I can assure you that [the administration] is considering presenting alternatives that will even be good for them, but will allow more savings for the [electric power] authority. To date, what Lisa Donahue left is a 4-cent increase to the [power] rate. We will try to get a better offer for Puerto Rico. We have until March 31 to negotiate Prepa’s debt,” he affirmed.
In another matter concerning Prepa, Sánchez said the government has serious problems with the power utility’s government board, which is why they aim to change it through a bill that is currently under the Legislative Assembly’s consideration.
“We have a serious problem at Prepa with a discrepancy that exists with the current governing board, because we are going in the opposite direction. That is why there is a bill being considered in the Legislative Assembly that would allow a change to a government board that isn’t aligned with the government and the public policy people voted for,” he said.
Why did the government decide not to make the fiscal plans presented Wednesday by the agencies to the Fiscal Oversight & Management Board, Caribbean Business asked.
“They are drafts that are work documents. The final version will be ready by next Tuesday. You won’t have to wait much. We are talking about a few days to have the document in your hands. In Prepa’s case, there was a leaked document that evidently won’t be what [the administration] will be working on and makes for a lot of confusion because those are work plans. What we don’t want is for people to arrive at erred conclusions based on work documents,” he replied.
As for the University of Puerto Rico (UPR) and its fiscal plan, Sánchez said the $300 million parameter can be reached, not only with cuts, but also with an increase in revenue, and is precisely the analysis the public academic institution must make.
“It is a challenge [to develop the government’s fiscal plan without the UPR’s]. The UPR’s number is one of the parameters of the equation, so as long as the government doesn’t have it, there is a variable in the fiscal plan that creates a problem. If the UPR wants to do that to the government of Puerto Rico, that is its decision,” he said.