Engineers give Puerto Rico infrastructure a grade of ‘D-‘

Energy received the lowest grade of ‘F’

SAN JUAN — The American Society of Civil Engineers (ASCE) issues an Infrastructure Report Card every four years. After a comprehensive assessment of infrastructure conditions and needs, it assigns grades using a simple A to F school report card format and makes recommendations to raise them.

The ASCE Committee on America’s Infrastructure, made up of expert civil engineers, assigns grades using the following criteria: capacity, condition, funding, future need, operation and maintenance, public safety, resilience and innovation.

In its inaugural Report Card for Puerto Rico’s Infrastructure, the ASCE Puerto Rico Section announced a near failing grade of a ‘D-‘ for the island’s infrastructure. The Report Card graded eight categories of infrastructure: bridges (D+), dams (D+), drinking water (D), energy (F), ports (D), roads (D-), solid waste (D-), and wastewater (D+).

According to the report, much of the island’s infrastructure is reaching the end of its useful life, and infrastructure networks are still being rebuilt after hurricanes Irma and Maria devastated the island in 2017. Energy received the lowest grade of ‘F,’ meaning the system’s infrastructure is in unacceptable condition and has widespread advanced signs of deterioration.

“Hurricanes Irma and Maria destroyed much of Puerto Rico’s electric grid in 2017, causing the island to experience the longest blackout in American history and the second-longest blackout across the world; some areas on the island had no electricity until 11 months after the storm. In August of 2017, Puerto Rican officials estimated that $1.6 billion was needed in overall infrastructure investment to meet the economic goals needed to prevent bankruptcy,” reads an article published on www.infrastructurereportcard.org, where the the full report can be found here.

Hurricane Maria’s impact one month later increased the funding required to improve infrastructure. The Puerto Rico Electric Power Authority (Prepa) proposed a $20 billion plan to renovate the energy grid on the island. Thus far, funding has been provided to restore electricity access, but the resulting grid is fragile, and blackouts are frequent, the ASCE adds.

However, the society says, “Puerto Rico’s failed energy infrastructure did not start with the 2017 hurricanes; the existing grid was already in disrepair and experienced frequent outages. Coupled with the 2017 events, the electric grid reached the point of total failure. Puerto Rican authorities have since focused their efforts on short-term goals of restoring power as quickly as possible.”

Congress appropriated $42.5 billion to FEMA for recovery efforts, but Puerto Rico only received $15 billion as of May.

“Puerto Rico is limited in what it can do financially to rebuild and revitalize the island’s infrastructure because the island is structured under tier 2 of the Puerto Rico Oversight Financial Oversight and Management Board (Promesa), which has fiscal control over the island due to the island’s bankruptcy proceedings,” as the ASCE wrote.

“If the island wants to rebuild and modernize its infrastructure, it must increase received investment by $1.23 billion to $2.3 billion annually—or $13 to $23 billion over 10 years. However, when considering deferred maintenance and hurricane-related recovery projects, the investment gap is even larger. There is a dire need for the island to rebuild smarter by building to adequate codes and standards, acquiring funding from all levels of government, and incorporating resilience into infrastructure plans by using climate-resilient materials,” the society summarizes about the report.

While most of the island’s infrastructure systems are in poor condition—exhibiting significant deterioration, the report describes opportunities to rebuild its infrastructure with a focus on resilience.

The following are recommendations by the ASCE Puerto Rico Section:

  • Increase the resiliency of Puerto Rico’s infrastructure. Our future depends on the ability of our infrastructure to not only protect us against increasingly severe storms, but to facilitate timely emergency management, response, and recovery efforts after a major event. The resiliency of all our networks can be improved by requiring the Central Government, municipalities, and industry build to ASCE standards, incorporating life-cycle cost analysis into projects, and by maintaining our existing assets.
  • Establish a Puerto Rico Infrastructure Plan with a wide variety of stakeholders and experts in the field. Infrastructure development is a long-term endeavor with significant impacts on economic growth and competitiveness.
  • Puerto Rico’s infrastructure systems need comprehensive and consistent maintenance programs and databases. A lack of programmed funding for the comprehensive maintenance of our existing roads, bridges, energy, dams and other critical networks has severely impacted the lifespan of these assets. Developing comprehensive asset management databases is a critical first step, as these databases can help determine total funding and maintenance needs.
  • Improve and increase the technical expertise at agencies that own and operate infrastructure so that they can complete regulatory requirements. Many of Puerto Rico’s agencies have too few technical experts to operate the infrastructure in accordance with regulations and customer expectations. Additionally, institutional knowledge is not codified in the agency, but instead may be lost when individuals retire or resign.

To facilitate smart building, ASCE published a series of codes and standards for grid design and construction, such as ASCE 7, to better enable Puerto Rico’s energy infrastructure to withstand future storms and other stresses.

ASCE State Infrastructure Report Cards are modeled after the national Infrastructure Report Card, which gave America’s infrastructure a grade of ‘D+’ in 2017. To read the full report and learn more about Puerto Rico’s solutions to raise the grade, click here.

The ASCE represents more than 150,000 civil engineers worldwide and is the United States’ oldest national engineering society. It works to raise awareness of the need to maintain and modernize infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency.




Puerto Rico business organizations rail against expected inventory tax bill

The Puerto Rico Capitol in San Juan (CB file)

Assure it would not address issue of having sufficient provisions to face a natural disaster

SAN JUAN — Members of the Puerto Rico private sector issued public statements Tuesday in rejection of a draft bill they are urging the island’s legislature to reconsider as it would cap the inventory tax businesses pay and exempt any amount over it from being taxed, which they assure does not address what they call a national security issue. 

They said the proposal Rep. Antonio “Tony” Soto and the chairman of the Municipal Revenue Collections Center (CRIM by its Spanish acronym), Javier Carrasquillo, intend to introduce only days before the legislative session ends would keep inventory levels on the island too low.​

“At this point, we still have not had access to the draft and, according to media reports, the private sector and Puerto Rican citizens’ call for the elimination of the inventory tax is not being addressed at all. We have been discussing and analyzing for almost two years and it does not seem prudent for them to want to pass a bill that does not address the situation concretely,” Retail Trade Association President Iván Báez said in a statement.​

Meanwhile, Liliana Cubano, president of Hecho in Puerto Rico, the Made in Puerto Rico brand, warned of serious long-term consequences if the measure were approved because, as she put it, “eliminating the inventory tax is not even talked about, but rather a fixed amount for five years as the period to find a substitute [to the tax] that they have yet to exert the will to produce. Our call is to not introduce it and not approve it.”​

For his part, Puerto Rico Automobile Distributors Association President Julio Ortiz stressed that experts, economists and citizens had reached a consensus on the issue, that not learning from experience and past emergencies would raise the risk of a crisis occurring on the island.​

“The issue of the elimination of the inventory tax is critical to preparing for another emergency since it not only impacts food and water, but also all supplies and throughout the year,” he said.​

They all stressed the need to count on having sufficient basic provisions and supplies throughout the island, citing official statistics that Puerto Rico only has an inventory sufficient for less than 20 days were the shipping supply flow to be somehow impaired.​

They also pointed to reports by Professional Market Research, which found that 2018 ended with an alarming percentage, of more than 20 percent, of aisle products out of stock and that 2019 was averaging 15.7 percent in out-of-stock products, or almost double the 8 percent with which other markets operate, so they will continue advocating for the elimination of the inventory tax by emphasizing that the island’s geography requires a tax system that does not penalize businesses for preparing and stocking up on supplies to face natural disasters.

“It is beyond belief that this tax has not been eliminated two years after the [2017] hurricanes [Irma and Maria] and we are talking about waiting five more years. This imposition has transcended from being a bad tax to being an obstacle to the security of the people and for the economic recovery of the country. The pressure exerted by the mayors on the legislature has certainly been stronger than the duty to the people of Puerto Rico, thus we request that this measure is reconsidered and not approved,” said Kenneth Rivera, the former president of Puerto Rico’s Chamber of Commerce and CPA Society.​

The private sector representatives demanded that the government tackle the issue seriously, not with temporary bills that do not address the root of the matter.




Uber presents new safety features

Gabriel Gutiérrez, general manager of Uber for the region of Panama and the Caribbean

Reveals tech during event for Puerto Rico driver-partners

SAN JUAN — Global ride-hailing platform Uber presented Thursday three new features in its application that will be implemented with the objective of offering its driver-partners safety information and transparency when accepting a trip.

The company pointed out that the initiative is part of its commitment to provide increasingly reliable experiences to its drivers and riders.

The new tools were presented by the general manager of Uber in Panama and the Caribbean, Gabriel Gutiérrez, at an event where more than 100 driver-partners were present.

“Since the Uber app arrived in the island three years ago, one of our priorities has been to maintain an open dialogue with the driver-partners and all interested parties. Their comments and observations are essential to make improvements to our technology continually,” Gutiérrez said.

The first feature presented by the general manager was the option to choose the payment method. With it, he explained, the driver-partners will be able to know in advance whether the trip will be paid with cash or credit, allowing the driver-partner to choose whether to accept the trip according to the payment method of their preference.

The second change to the application Gutiérrez announce is the user usage history, which allows Uber drivers to know how long the user has been using the service.

“With this new functionality, we seek to increase transparency by providing more information. Meanwhile, these two functionalities do not generate any negative impact for the driver or their rating in case of not accepting a trip,” the executive explained.

The third new feature is the detection of trip anomalies. It allows the app to automatically identify long or unexpected stops and recommend safety features the driver-partner could need. This functionality is optional and can be turned off at any time in the application’s settings.

“The issue of security has always been our priority, and becomes even more relevant due to recent events, a matter we take very seriously and is a never-ending job. We know that to have a safer environment in the country, work from many parts is required, as it is from the authorities and other entities of the community, and at Uber we want to be part of the solution, as we are doing with the development and implementation of these types of tools that we announce today,” Gutiérrez said.

The general manager emphasized that the implementation of these initiatives is the result of the company’s constant investment in new technologies that will improve the experience of all the people who use its platform. The company’s goal, he said, is to increase transparency even more by providing more information to the thousands of driver-partners who use the app in Puerto Rico.




Puerto Rico economic activity for July drops compared with last year

Economic Development Bank index reflects 2nd year-on-year drop after 11-month climb

SAN JUAN — Puerto Rico’s economy continues to show signs of weakness, as a leading indicator, the Economic Development Bank’s Economic Activity Index (EDB-EAI), registered a second consecutive annual drop after what had been 11 straight months of increases.

According to the latest report, July’s EDB-EAI reached 120.5, 0.1 percent higher compared with June, but 1 percent less than for July 2018.

The seasonally adjusted EDB-EAI is made up of four indicators: total non-farm payroll employment reflected in the establishment survey; total electric power generation in millions of kilowatt-hours (kWh); cement sales in millions of 94-pound bags; and gas consumption in millions of gallons.

Two indicators, total nonfarm payroll employment and total electric power generation, showed year-to-year increases of 1.6 percent and 2.9 percent, respectively. However, cement sales and gas consumption decreased by 7.8 percent and 18.7 percent, respectively.

“It should be noted that the annual comparison is with respect to a period during which the island’s electrical system was not completely restored after the impact of hurricanes Irma and Maria,” reads July’s report, which notes that the annual EDB-EAI for July last year had increased by 0.2 percent. “Consequently, EDB-EAI growth is gradually approaching the behavior that existed prior to the hurricanes.”

The EDB-EAI had been decreasing on an annual basis before the storms struck the island, with the last annual increase registered in 2012.

The index began an 11-month inter-annual increase in July 2018, as the island’s economy was lifted by the influx of hundreds of millions of dollars in post-hurricane aid for emergency repairs. Nevertheless, the index reflected its first year-over-year decrease in June, as most of these projects, including the Federal Emergency Management Agency’s (FEMA) $1.2 billion “Tu Hogar Renace” (Your Home Reborn) home repair program, ended earlier this year.

Puerto Rico’s economy has yet to see the effects of the billions in additional federal funding assigned for permanent reconstruction of housing and infrastructure damaged by the powerful hurricanes in September 2017, given that such monies have been largely held up by bureaucratic wrangling between federal agencies, such as FEMA and the U.S. Department of Housing & Urban Development (HUD), and the commonwealth government.

In an interview with Caribbean Business, Alejandro J. Abrams, president of the Associated General Contractors of America, Puerto Rico Chapter, said the number of employed construction workers had increased from about 20,000 to more than 50,000 with post-hurricane repairs, but had dropped back to about 30,000 in the last few months. He attributed the slowdown to the gap in construction activity since the end of the first phase of reconstruction.

“Gov. Wanda Vázquez is developing efforts as never before to propel economic activity, efforts that will be positively reflected in the next reports,” EDB President Luis Carlos Fernández Trinchet said in a statement. He said these efforts involve the arrival of Community Development Block Grant-Disaster Recovery (CDBG-DR) Program funds, the implementation of “strategies for economic development” for small and midsize businesses and through the Opportunities Zones program, as well as other housing programs, including aid to potential homebuyers “who work in critical tasks.”

Fernández noted that the EDB-EAI increased 5.8 percent during fiscal year 2019, which ended June 30, the first positive growth after six-consecutive declines. He added that the index rose 1.7 percent between January and July this year.

The new EDB chief said that, in contrast, fiscal year 2018, which encompassed the immediate post-hurricane emergency, which lasted months, ended with a 6.4 percent decline, according to the EDB-EAI.

The EDB-EAI report states that when annualized, the index level is “highly correlated” with the real gross national product (GNP), although it is not a direct measurement of real GNP, which includes other factors not considered in the EDB-EAI. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents.

In fact, in another indicator of a stalling economy, retail sales fell by 6.3 percent in May compared with sales for the same month last year, according to the last monthly economic report to the governor, issued in August.




Puerto Rico Ports chief, shippers assure supply availability as Dorian skims Florida

Puerto Rico Ports director Anthony Maceira, center, meets with the Puerto Rico Shippers Association (Courtesy)

Retailers insist on repeal of inventory tax amid hurricane season

SAN JUAN – The executive director of the Puerto Rico Ports Authority (APPR), Anthony Maceira, met Tuesday with the Puerto Rico Shippers Association and its president, Eduardo Pagán, and assured the availability of food and merchandise on the island during the peak of the hurricane season.

In addition, they discussed concerted actions that shipping companies have taken to ensure the arrival of supplies to the island. Gov. Wanda Vázquez welcomed the meeting, a Ports release says, “noting that her administration is fully collaborating and made itself available to help the shipping companies ensure the arrival of merchandise to Puerto Rico” during the hurricane season.

As Hurricane Dorian’s path took it up along the east coast of Florida, the U.S. Coast Guard ordered the closure Monday of the Port of Jacksonville, from where 90% of the merchandise is shipped to the island.

“Anticipating this situation the shipping companies [ordered] the departure of vessels in advance last week from Florida and New Jersey with merchandise to Puerto Rico. In the past few days, we have been receiving such vessels, and the closure of the Port of Jacksonville is estimated to last only a couple of days, which represents a minimum delay. In addition, there is merchandise on the island for between 20 to 30 days, which rules out that there will be a shortage of food and other products,” Maceira said.

This week (Aug. 31 to Sept. 6), the island will be receiving about 40 different cargo vessels, the Ports official added.

For his part, Pagán clarified that the cargo ships that left the island for Jacksonville will “only experience a minimum delay” while the stateside port is reopened, which is expected Thursday.

“It should be noted that after the experience with [Hurricane] Maria two years ago, many food distributors have increased their inventory of supplies on the island between July and November. In addition, we have agreements with other ports, both inside and outside the United States, to use them if necessary to transport merchandise to Puerto Rico,” Pagán said.

Retailers concerned

Meanwhile, the president of the Puerto Rico Retail Trade Association (ACDET by it Spanish initials), Iván Báez, again urged the government and the legislature to end the inventory tax, “because of the food safety risk it represents for Puerto Rico,” as the closure of the Port of Jacksonville was announced.

“The elimination of the inventory tax is urgent. The crisis we suffered after the scourge of Hurricane Maria exposed the precariousness of our supplies and our vulnerability. We reiterate that the current tax prevents having the necessary inventories maintained to meet the needs of our people,” Báez said in a statement.

He stressed that a large part of the food, basic necessities and supplies consumed on the island are shipped from the Jacksonville port and the island’s stores are on high alert.

“Although the Puerto Rico Ports Authority assures that supplies would [only] be delayed 48 hours to reach our shores, the truth is that in an emergency, there are no guarantees and we have been lucky that the recent threats have not become complex emergencies. We depend on products from other latitudes and if the port that supplies us with more than 80 percent of the imports on the island is paralyzed, we are completely helpless,” he stressed.

Báez also pointed out that during the last legislative session, ACDET, along with other private sector leaders, mayors, the executive branch officials and lawmakers agreed to identify alternatives to the tax. However, he said, despite the insistence of ACDET and the coalition of associations that have joined the private sector’s appeal, no results have been achieved.

—CyberNews contributed to this report.




Puerto Rico economy giving mixed signals

(Photo by Harshal Desai on Unsplash)

Unemployment lower despite loss of jobs in key sectors

SAN JUAN — The economy of Puerto Rico is giving mixed signals, according to recently released data that show the continuation of an apparently booming job market and growing tourism, but also indicate lower retail sales and fewer jobs in such areas as office- and health-related work, as well as construction.

According to the Working Group Survey of a representative sample of households, the unemployment rate on the island reached a historically low level of 8.1 percent in July, or a 0.7 percentage point drop compared with the 8.8 percent registered the same month last year. The unemployment rate in June stood at 8.4 percent.

Puerto Rico had an estimated 88,000 people unemployed in July, 8,000 fewer than the 96,000 unemployed the same month last year.

Half of the people unemployed in July had been out of the job for five weeks or less, while 19 percent had been unemployed for 15 weeks or more, according to the survey. About 44 percent of survey respondents said they were laid off and do not expect to be called back to work, while another 14 percent said they had completed temporary employment.

The estimated number of employed people on the island reached 998,000, an increase of 2,000, or less than 1 percent, compared with the 996,000 employed the same month last year, according to the survey. July’s employment number represents an increase of 8,000 compared with June’s 990,000 employed.

The labor force participation rate was 41.7 percent in July, rising 0.6 percentage points compared with the 41.1 percent the same month last year, but a 0.2 percentage point drop compared with June’s 41.9 percent. In a related figure, the island’s labor force stood at nearly 1.1 million in July, an increase of 5,000 compared with the June figure but 6,000 fewer than in July 2018.

The number of people age 16 or older, on which the survey is based, decreased by 41,000, or 1.5 percent. This sector of the population fell from 2.68 million in July 2018 to 2.64 million in July this year.

Sales-related jobs, as well as managerial and professional employment, which includes teachers, grew by 23 percent between July 2018 and July 2019. The number of people employed as machine operators, assemblers and inspectors rose 12 percent during the same period.

On the other hand, the number of people holding office and management-support jobs, which include secretarial work, dropped 22 percent between July 2018 and July 2019, according to the survey, which showed there were 21 percent fewer health technicians employed during the same period.

Also dwindling was the number of people holding service-related jobs, including those in domestic and security-related work, which dropped by 11.4 percent between July 2018 and July 2019.

Construction drops

While this survey does not explicitly identify construction as a category, the number of related workers in the survey, such as carpenters, bricklayers and foremen, fell by 4 percent during the same period. Construction is considered a key driver of the modest economic recovery in Puerto Rico after federal disaster recovery aid began to be disbursed in the aftermath of hurricanes Irma and Maria in 2017.

Even this economic uptick seems to be petering out with the completion of post-hurricane repairs and billions of dollars in additional permanent reconstruction funding for the island being held up due to factors ranging from federal bureaucracy to a loss of confidence in island officials after two former island agency heads were indicted for mishandling contracts that involved federal recovery funds.

The commonwealth’s Economic Activity Index registered its first year-over-year drop in June after rising for 11 consecutive months.

In fact, after registering double-digit increases last year, sales at hardware and home furnishing stores plunged 32.4 percent and 37.2 percent, respectively, between April 2018 and April 2019, according to the latest Puerto Rico Trade & Export Co. establishment survey, which stated that general retail sales fell nearly 3 percent during the same period. Sales at hardware and home furnishing stores have fallen 22 percent and 20 percent, respectively, between January and April this year, according to the survey.

The same survey found that sales and new and used automobiles fell 3 percent between April 2018 and April 2019, but rose 8.4 percent between January and April this year.

Moreover, sales at sports, musical instrument and entertainment establishments fell 29.7 percent between April 2018 and April 2019, and dropped 28.6 percent from January to April this year. Sales at restaurants and places where alcoholic beverages are sold also fell 2 percent between April 2018 and April 2019, and dropped 5.1 percent between January and April of year.

Meanwhile, the number of people staying at Puerto Rico lodgings increased 22.7 percent between fiscal year 2018 and fiscal 2019, which ended June 30, according to the commonwealth Tourism Co. Registrations in Tourism Co.-certified lodgings increased from 1.51 million in fiscal 2018 to 1.85 million in fiscal 2019. However, the occupancy rate fell from 76.4 percent to 67.7 percent during the same period.

Economist Heidi Calero recently told Caribbean Business that she considers the construction-driven economic uptick “a prelude to a recovery,” noting that many times more investments are needed on the island to get it out of what she calls a decade-long depression.

Economists have cautioned against reading too much into comparisons with economic data from 2018, given that at the time the island was still in the process of recovering from the onslaught of hurricanes Irma and Maria, and many businesses had yet to be fully operational amid lingering power blackouts.




Clark gas stations investing over $25 million in Puerto Rico

Looks to increase market share with independent retailers by year’s end

SAN JUAN — Illinois-based Clark Brands LLC and Puerto Rican distributor Bita’s Fuel Corp. announced they invested more than $25 million as part of their Puerto Rico expansion plan.

Clark’s brand marketing manager, Héctor Gierbolini, said five or six stations will be opened by independent retailers by the end of this year to further solidify the company’s presence on the island. In November, it had set out to open 10 gas stations, a number it has surpassed with 14. In addition to the negotiations that could be concluded by year’s end, he said, the company may set up in others as well.

As part of the company’s strategy to achieve a greater impact on the Puerto Rico market, Bita’s Fuel and Clark gas stations have developed an innovative support program for retailers that includes a competitive price guarantee, the highest quality gasoline, investment in the stations’ corporate image, marketing and advertising support, and the inclusion of the “On The Go” brand in station convenience stores, as well as studies, market support and data programs offered by Clark Brands, the executive explained to Caribbean Business.

“[Last week’s] announcement validates once again the commitment that Gasolineras Clark and Bita’s Fuel have with Puerto Rico, even more so now, given the scenario of uncertainty that the country’s political situation has generated for investors. The arrival of our gas stations and the investment being made in each of our service stations is focused on improving the customer experience and providing retailers additional tools to maximize their business,” Gierbolini said.

“We have had a great reputation as a distributor during our 17-year trajectory in the market. We have managed to consistently stay in the price lead for the past few years, according to data published by the Department of Consumer Affairs [DACO by its Spanish acronym] and now, under the partnership with Clark, we have positioned ourselves as the best alternative that an independent retailer has to see their business grow,” he assured.

Clark has service stations in San Juan, Bayamón, Ceiba, Juncos, Santa Isabel, Guayama, Manatí, Vega Baja, Morovis, Camuy, San Sebastián and Aguada.

The brand’s Puerto Rico market share fluctuates between 10 percent and 15 percent, but the company’s goal is to increase its participation to 20 percent, the executive said.

Clark began operating stations in Puerto Rico last year, but 10 months later, even retailers who are affiliated with other brands continue to show interest in switching to Clark.

“There is no doubt, once that independent market that no longer has a brand moves to the Clark brand, it will see 20 percent to 30 percent and possibly more in many instances. The price is linked to the brand, and obviously the independent market that has no brand has the disadvantage when the consumer asks, ‘Where does the gasoline come from?’ In our case, since it is a brand, the consumer already feels more confident.”

Gierbolini said the retailers who approach Clark should have terminated their contract with other brands, and projections are based on the growth and investment Clark would be making over the following months.

“A transaction takes 45 to 60 days to complete per station. It is not an overnight decision. It is a decision the retailer thinks about, analyzes the proposals made and compares with other proposals from other companies,” he said.

Clark Brands licenses both Clark and Crown gasoline brands and is a petroleum payment-processing solution for more than 1,000 independent petroleum marketers and retailers in 32 states and the District of Columbia.

Retail state

The fuel that Bita’s Fuel Corp. provides to Clark as a local industry distributor comes from Buckeye Caribbean Terminals LLC, Shell Trading in Yabucoa or Total Petroleum in the San Juan metropolitan area, Gierbolini told Caribbean Business.

Data from DACO’s economic studies division on gasoline wholesaler prices reveal that as of July 31, 87-octane, or “regular,” gasoline distributed by Bita’s was being sold at 67.6 cents per liter. Meanwhile, higher-octane, or “premium,” gasoline had a price of 73.94 cents a liter. Meanwhile, diesel’s price was 63.11 cents a liter.

According to DACO’s table, compared with Bita’s prices, the price for Total’s regular gas was 72.7 cents per liter, premium was priced at 82.7 cents and diesel 67.7 cents, according to the last date registered in the report, July 18. Meanwhile, for the last reported date, July 23, Sol Puerto Rico, or Shell’s, prices were the same per liter, respectively.

Therefore, when comparing the differences in the price of regular gas with Shell and Total, Bita’s is 5.1 cents less. For premium gas, the difference is 8.76 cents. In the case of diesel fuel, the difference is of 4.59 cents.

As for the general market, data on gasoline consumption in Puerto Rico from the latest Economic Activity Index (EAI) shows that 73.9 million gallons were purchased in June, according to the table prepared by the Economic Development Bank for Puerto Rico. This figure represents a 15.5 million-gallon drop compared with the same month last year, when consumption reached 89.4 million gallons.

However, according to the EAI, the average monthly retail price per gallon in June this year was $2.92, or 12 cents lower than in June 2018, when a gallon cost $3.04.




Uber and Puerto Rico airport operator mum about agreement

(Screen capture of www.aeropuertosju.com)

Talk of Aerostar deal to allow the ride-hailing company in premises dates to 2018

SAN JUAN — Although the president of Aerostar Airport Holdings, Agustín Arellano, said in an interview almost exactly a year ago that Uber would be able to pick passengers up at Luis Muñoz Marín International Airport in Carolina in September 2018, both companies have remained silent about the progress of negotiations.

“I want to reaffirm that our intention is for Uber to enter the airport, to participate in the airport’s transportation market, but to do it in an orderly manner, as established in the contracts we have with all means of transportation, and we are doing it, we are negotiating it. We believe that we will soon reach an agreement to announce that they can pick up passengers,” Aerostar’s former administrator, Agustín Arellano, told NotiUno 630 radio at the beginning of September.
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Caribbean Business left request for comment with Uber, while Aerostar issued a brief statement.

“In relation to Uber, we are still in the process of finalizing the agreement, so we still don’t have a start date for the service,” wrote Aerostar Operations Director Nelman Nevárez. “In line with what is required by the regulations established by the Transportation and Public Services Bureau [NTSP by its Spanish initials], Aerostar will establish the same parameters for all transportation services authorized to operate at the airport.”

Sources with knowledge of the negotiations assured Caribbean Business that reports claiming the announcement would be made this month were not officially sent by either company.

In May 2017, then-Gov. Ricardo Rosselló ordered Tourism Co. Director José Izquierdo to issue an administrative order to allow private cars to provide transportation at the airport amid what he described as an “insufficiency of transportation provider services.”




Record Puerto Rico Treasury revenue expected to drop

Treasury Secretary Francisco Pares Alicea (Courtesy)

Secretary Parés points out it exceeded fiscal board projections 

SAN JUAN — While the Puerto Rico Treasury Department reported record-breaking tax revenue for fiscal year 2019, it is projecting a drop during current fiscal 2020 due to the implementation of enacted tax cuts

Puerto Rico Treasury Secretary Francisco Parés Alicea said that preliminary general fund net revenue totaled $11.38 billion for fiscal 2019, which ended June 30, an increase of 22 percent, or $2.06 billion over the $9.31 billion collected during fiscal 2018. The revenue rise was fueled mostly by greater corporate and individual income tax returns as well as by sales and use tax (IVU by its Spanish acronym) collections.

The 2019 figure was $1.14 billion, or 10 percent, higher than agency estimates, Parés said, noting that this was the third consecutive fiscal year Treasury exceeded revenue projections.

“This is a new record number for revenue collections,” the Treasury chief said in a statement.

Parés attributed the seemingly booming revenue to a “combination of several factors,” mainly economic activity generated by recovery and reconstruction efforts in the aftermath of hurricanes Irma and María in 2017. He also credited revenue growth to the New Tax Model, which came into effect in January, and to the “successful implementation” since December of the second phase of the Internal Revenue Unified System (SURI by its Spanish acronym), as well as the Taxpayer Rehabilitation Program.

However, Parés said his agency was projecting that revenue for fiscal 2020, which began July 1, will reach $10.41 billion, 8.5 percent less when compared with fiscal 2019. The Treasury chief attributed the expected drop to the planned cut for the IVU on prepared food from the current 11.5 percent to 7 percent, which starts Oct. 1, as well as to enacted income tax cuts, and the earned-income tax credit.

The official said his agency expects to again meet estimates for the current fiscal year, noting that “the behavior of revenues in July, the first month of the fiscal year, was positive with respect to projections,” adding that tax compliance should continue to improve with the implementation in December of the third phase of the SURI system, which includes individual and corporate income taxes.

The main driver for last fiscal year’s record-breaking tax revenue was a $716.1 million, or 40.3 percent, increase in corporate income tax collections. Revenue in this category rose from $1.78 billion in 2018 to $2.49 billion in 2019, Parés said. Individual income tax collection rose by $264.2 million, or 13.5 percent, reflecting $2.22 billion in revenue compared with $1.96 billion in fiscal 2018.

Revenue from Act 154, which imposes a 4 percent excise tax paid by stateside companies on their purchases from Puerto Rico-based subsidiaries, increased by 8.8 percent, or $168.3 million, between fiscal years 2018 and 2019. Revenue in this category, which constitute almost one-fifth of the general fund revenue, rose from $1.68 billion in fiscal 2018 to $1.83 billion in fiscal 2019.

IVU revenue totaled $2.81 billion in fiscal 2019, a year-over-year increase of $283 million, or 11 percent. Some $2.3 billion in IVU revenue went into the commonwealth general fund, for a $653 million, or 39.7 percent, increase. IVU revenue to the general fund climbed from $1.65 billion in 2018 to $2.3 billion in 2019.

Parés said another $413 million in IVU revenue was allotted to the Puerto Rico Sales Tax Financing Corp. (Cofina by its Spanish acronym) Adjustment Plan, which was approved in February by U.S. District Court Judge Laura Taylor Swain, who oversees the island’s bankruptcy-like process. 

Moreover, motor vehicle excise tax revenue increased 27.5 percent, to $519.1 million in fiscal 2019, said the Treasury chief, who called this “the highest revenue level in 13 years.”

Parés stressed that Treasury’s revenue exceeded three projections by the island’s Financial Oversight & Management Board during the past year. The board had projected $8.5 billion in revenue at the beginning of fiscal 2019, in July last year. The fiscal panel again revised the amount to $10.2 billion on Oct. 23, and to $10.71 billion in the last fiscal plan it certified May 9.




Face of Puerto Rico’s largest bank steps down from executive role

Richard Carrión (Eva LLoréns/CB)

Banco Popular’s Carrión transitions from executive chairman to non-executive chairman

SAN JUAN — Popular Inc. announced Friday that Richard L. Carrión will transition from his current role of executive chairman to non-executive chairman of the board, effective July 1.

Carrión was named executive chairman July 1, 2017, after serving as chairman since 1993 and CEO of Popular for 26 years, a role in which he was succeeded by Ignacio Álvarez.

Carrión, who joined the company in 1976, said: “Popular has had a special place in my heart since childhood and I have been blessed to serve it in different roles over the past four decades. With the organization stronger than ever, supported by a talented team under Ignacio’s leadership, this is the appropriate time for me to transition to a non-executive role. It is a privilege to continue my service to Popular as Chairman of the Board.”

Under Carrion’s leadership, Popular Inc. ranks among the top 50 U.S. bank holding companies by assets. Banco Popular de Puerto Rico provides retail, mortgage and commercial banking services in Puerto Rico and the U.S. Virgin Islands. It also offers auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. Stateside, Popular provides retail, mortgage and commercial banking services through its New York-chartered banking subsidiary, Popular Bank, which has branches in New York, New Jersey and Florida.

“I know I speak for everyone in the Popular family in expressing my heartfelt appreciation to Richard for his many years of exemplary service. Richard has been a truly iconic leader and I am grateful for his mentorship and trust during this transition. We are fortunate to have the opportunity to continue to benefit from his guidance as Chairman of the Board,” Álvarez said in the release.

The illustrious banker earned a bachelor’s degree from the Wharton School of Finance and Commerce at the University of Pennsylvania and a master’s degree in Management Information Systems from the Massachusetts Institute of Technology.

Carrión served as president of Popular Inc. from 1990 to January 2009 and again from 2010 to 2014. He served as president of Banco Popular de Puerto Rico, Popular’s principal subsidiary, from 1985 until 2004. He also served as chairman and president of Puerto Rico Investors Tax-Free Fund Inc. I, II, III, IV and V from 1994 to 1998. He served as chairman and president of Puerto Rico Tax-Free Target, according to Bloomberg.

The veteran banker also served as chairman and president of Maturity Fund Inc. from 1996 to 1998 and II from 1997 to 1998. He served as chairman and president of Puerto Rico Investors Flexible Allocation Fund from December 1998 to January 1999.

He has been the chairman of the Board of Trustees at Banco Popular de Puerto Rico Foundation and Fundacion Banco Popular Inc. since 1982, and chairman and Director of Popular Community Bank Foundation Inc. since 2005. He has been a director of Banco Popular Foundation Inc. since 2005.

He also served as chairman of the Vall Banc S.A.U. He serves as a director of Financial Services Roundtable, of After School Matters Inc. and of Fort Dodge Animal Health S.p.A. (Fort Dodge Animal Health, Inc.).

He has been a member of the Board of Managers at EVERTEC Group LLC. He had been an independent director of Verizon Communications Inc. from 1997 to 2019. He serves as a director of American Home Products Corp. and of Verizon New York Inc.

Carrión serves on the board of First Bank Romania (formerly Piraeus Bank Romania), Vall Banc and NIBC Holding N.V. He has been a member of Supervisory Board NIBC Holding NV since 2017. He has been a director of Verizon New England Inc. since 1997.

Carrión served as a director at the Federal Reserve Bank of New York from January 2008 to 2016. He served as a director of NYNEX Corp. from 1995 to 1997; EVERTEC from 2010 to 2013 and Wyeth LLC from 2000 to 2006.

The executive served as director of Equity One Inc.; Popular Finance Inc.; Popular Auto Inc.; Popular Mortgage Inc.; Popular Securities Inc.; Popular Insurance Inc. and GM Group Inc.

He also served as a member of the board of the National Museum of American History, Smithsonian Institution, from 1997 to 1998. Carrión serves as the president of the Board of Trustees of the Puerto Rico Committee for Economic Development and participates in the boards of several other civic organizations.

Carrión has also been a member of the International Olympic Committee (IOC) since 1990 and served on its executive board from 2004 to 2012. In 2010, he was elected to the Central Board of the International Basketball Federation (FIBA).

“On behalf of a grateful Board, I would like to recognize Richard’s contributions, vision and his continued commitment to Popular, as well as Ignacio’s leadership since he assumed the position of CEO. We look forward to continue working with both to ensure Popular remains a strong, growing and vibrant organization,” William J. Teuber Jr., Popular lead independent director, said in the bank holding company’s announcement Friday.