Animus celebrates 5 years of promoting women’s development

Animus founders Carlos Cobián and Lucienne Gigante (Courtesy)

Friday event will gather over 35 local, international speakers at Puerto Rico Convention Center

SAN JUAN — The platform for women’s personal, professional and business development, Animus, announced that its fifth annual summit, which is of the largest innovation conferences in the region, will take place this year at the Puerto Rico Convention Center on Nov. 15.

In five years, Animus, created by Cobian Media and Lucienne Gigante, has impacted more than 4,000 women and has brought together over 120 speakers from Puerto Rico and the world from all types of industry, including STEM (science, technology, engineering and mathematics) finance, banking, academia, medicine, the third sector, agriculture, communications, arts, media and sports.


“We bet on investing in women as a foothold for the economic development of the country. Animus connects, opens doors and provides tangible tools to businesswomen, professionals, students and leaders of all ages and industries, driving the moment in which they find themselves with ambition and purpose to improve their lives and community,” said Gigante, who has been creating innovation and economic development programs for women for more than 12 years.

Animus has been a platform for thousands to meet great women and their stories, including Supreme Court Justice Sonia Sotomayor, entertainment icon Rita Moreno and Olympic medalist Mónica Puig.


This year, “Animus: Women’s Innovation Journey” will present a variety of topics, stories, teachings and tangible actions. Some of the speakers that have already been announced include Veronica Chambers, Afro-Latin poet, co-author of four New York Times bestsellers and editor of a collection of essays by Michelle Obama; Shailee Basnet, Mt. Everest summiteer, comedian and leader of the “Seven Summit Women Team,” the first group of women in the world to climb the highest mountain on each continent; and Helga Yarí Paris-Morales, professional dancer and artist of the Studio Company at Washington Ballet Studio Co.

“The inclusion of women and men in the decision-making of our companies translates into more profitable companies. We continue making room and opportunities for the development of an inclusive ecosystem and a stronger economy for all,” added Carlos Cobián, co-founder of Animus and founder of Cobián Media.

Carlos Cobián, co-founder of Animus and founder of Cobián Media (Courtesy)

Economic Development Secretary Manuel Laboy announced that his department is joining forces with Animus to offer more tools for women entrepreneurs through the agency’s platform, “Maletín Empresarial para la Mujer” (“Business Briefcase for Women”), and that he will be presenting a series of programs designed to support them.

“Through the portal ‘Business Briefcase for Women’, we offer the tools to guide, facilitate and orient all those interested in creating their own businesses or expanding and growing their existing businesses with the vision of exporting their goods and services competitively to the world market. We know the power of Puerto Rican businesswomen and their growth is a key contributor to the economic development of Puerto Rico,” the official said.

After celebrating 2018 breaking attendance records with more than 1,000 attendees, Animus continues to grow in more areas.

Animus health

This year, with the launch of Animus Health, the platform provides a space to educate about the importance of treating health as a priority in life.

Animus Marketplace

Animus launched a call for innovative companies led by women and today announces the 30 companies chosen to exhibit their products and services at the summit.

Animus Workshops

Animus expanded its workshop series to address issues in greater depth, especially focusing on professional and business development, wellness, leadership, strategic positioning, finance and personal branding.

Animus Startup Showcase

Five businesswomen were chosen to make their pitch and present their value proposition to the audience, which includes potential investors, clients and business opportunities.

Animus Mentor Booth

The Mentor Booth allows participants to coordinate one-on-one appointments for the opportunity to receive mentoring by speakers and leaders.

Animus 2019 Speakers

—Charo Henríquez, senior editor, Digital Transition Strategy, New York Times; journalist, coach and mentor

—Elise Labott, CNN’s global affairs correspondent whose work has also appeared on MSNBC, Politico and other news outlets

—Erin Pelton, founder, Puerto Rico Live and Pinpoint Strategies / Public Affairs and Communications strategist who served in several senior positions in the Obama administration

—Helga Yarí Paris-Morales, professional dancer and Washington Ballet Studio Co. teaching artist

—Jen Auerbach-Rodríguez, head of strategic growth markets at Merrill Lynch Wealth Management

—Lauren Cascio, co-founder and COO, Abartys Health / business leader and entrepreneur

—Lorel Torres, CEO, co-founder and designer, Mare Cheia Swimwear, Miss Universe Puerto Rico’s official swimwear

—Mara Liz Meinhofer, finance expert and TEDx speaker

—Mariel Arraiza, Managing Director of / financial, technology and marketing executive

—María Pérez Díaz, professional judoka

—Robin Leeds, CEO, Winning Strategies, public policy expert with more than 30 years’ experience in Washington, leading human rights and women programs under First Lady Hillary Clinton

—Robyn Moreno, president, Robyn Moreno Media / writer, Latinx leader and Emmy-nominated TV presenter

—Shailee Basnet, Everest Summiteer, leader and professional comedian

—Sonia Torres, businesswoman and talent manager / Vico-C’s wife

—Veronica Chambers, Afro-Latin author, editor and poet / co-author of four New York Times best sellers and editor of Michelle Obama’s essay collection

Animus Startup Showcase

Amasar, Marisol Villalobos Rivera

étnica, Gloriann Sacha Antonetty Lebrón

Hazel Bar, Carmen Luisa and Carmen Fernanda Valentín

Lush: Plus Fashion Garb, Glorimari Arregui

OGMA Language Studio, Carla Bauzá López

Animus Marketplace

A Medias, Yéssica Delgado 

Ashtanga Yoga Puerto Rico, Elizabeth Sallaberry

Bien Cool, Josie Arroyo

Blueroof Puerto Rico, Alana and Naomi Cáceres

Dos Pinceles, Gabriela and Patricia Urrutia

For Reasons Unknown Creative Studio (FRUCS), Glenda Rosa

Gfree Foods, Ailed González & Jonelie Vélez

KNOT Predictable, Jeniffer Selosse and Lizzie Muñoz

MARIMU, Mari Muñecas

Museum of Contemporary Art of Puerto Rico, Carolina Cortés

Papaya Tropical, Vanessa Vila

Professional Writing and Development, Zaira Arvelo

Puerto Rico Loves Yoga & Wellness, Nayda Fernández

Renovad, Pilar Ávila

Retention Strategies, Marisol Ortiz

STEMpresarial, Dr. Margarita Cabrera

TeeChealo, Vettelinn Rodríguez

Tereques La Tiendita, Belisa Álvarez

Tersa Body Care, Betsy Serrano

The Dining Traveler, Jessica van Dop DeJesus

Ubuntu Puerto Rico, Yaribel Vega

21 Memories, Janette Rojas

Animus Workshops

—Andria M. Salvá, Ph.D., president, SHRM & EUˆQuest Talent Consulting / consultant and international facilitator of strategic organizational development

—Clarissa Llenza, owner, Home Cooking Therapy

—Charo Henríquez, senior editor of Digital Transition Strategy, New York Times / Journalist, Coach and Mentor

—Cynthia Martínez, founder, My Barely Famous Life / entrepreneur and strategist

—Idia Martínez. Lic. RP28, president, Upfront Communication Inc. / crisis management specialist and author of “Y ahora, ¿qué digo?” (“What do I say now?”)

—Mara Liz Meinhofer, finance expert and TEDx speaker

—Robyn Moreno, president, Robyn Moreno Media / writer, Latinx leader and Emmy-nominated TV presenter

For more information and to purchase tickets, visit

Puerto Rico wall spaces reserved for muralists from around the world

Celso González, Alexis Bousquet, Vero Rivera and Bob Snow. (Courtesy

Street artists urged to showcase their talent alongside island’s own

SAN JUAN – In partnership with Puerto Rico’s local art community, Discover Puerto Rico, the island’s destination marketing organization (DMO), has launched the “Blank Canvas Initiative,” a call to street artists around the world, inviting them to share their craft on the walls of Puerto Rico’s streets, and form part of the Island’s unique and booming arts scene.

“Puerto Rico boasts exceptional art museums, a flourishing art gallery scene, independent collectors, curators, quality events and highly skilled artisans, offering their work across the Island, and a thriving street art and mural experience unlike any other. For travelers who crave and seek out cultural arts and authentic experiences, Puerto Rico should top their list,” the DMO said about the inspiration for the initiative.

Local Puerto Rican artists identify and reserve wall spaces throughout the island inviting muralists worldwide to join the “Blank Canvas Initiative.” (Courtesy

Internationally recognized Puerto Rican artist Alexis Bousquet, also the founder of the Santurce es Ley street art festival, is teaming up with local artists Celso González, Vero Rivera and Bob Snow. Together, they are identifying wall spaces across the island to create “Reserved for” signs, which will serve as “blank canvas invitations” for global street artists around the world, to feature their art alongside Puerto Rico’s own, the Discover Puerto Rico explained.

“As artists, we believe in expression, and I hope that my fellow artists around the world see this opportunity to express themselves while being a force for good,” Bousquet said. “We welcome them to our Island, to take part in our booming art scene and to explore a place that will surely capture their hearts.”

The new artwork from the “Blank Canvas Initiative” will be showcased in time for the holidays, which the DMO always makes sure to remind potential travelers that the island’s are “renowned as the longest in the world.”

The holidays in Puerto Rico “are like no other, and culminate” with the San Sebastián Street Festival, the largest in Puerto Rico where thousands of locals and visitors alike gather to experience parades of cabezudos (big heads), live music, dancing, libations, food, and hundreds of authentic crafts by local artisans,” the organization explained.

The new murals will also be a focal point during upcoming “Santurce es Ley” street art festivals, which celebrate the thriving mural scene and stunning works in the area, approaching its eighth anniversary, where works are being created and unveiled live.

“Some areas of Puerto Rico are a true haven for mural art, yet we’re not a destination typically visited for that,” said Brad Dean, CEO of Discover Puerto Rico. “In addition to Santurce es Ley, our Island offers many options for travelers looking for rich arts and culture to be inspired – from our artisan’s work, widely available throughout the Island, to museums and art galleries open year-round, and other art-focused events like the MECA Art Fair – our Island is a culture lovers’ delight for anyone seeking to immerse themselves in authentic experiences and everything Puerto Rico has to offer.”

Puerto Rico’s “art culture sets it apart from other Caribbean destinations,” the DMO assured in the initiative’s announcing release, adding that the island hosts the annual MECA Art Fair Nov. 21-24 – “the largest” in the Caribbean.

“The unique blend of Taino Indian, African and Spanish heritages makes the art scene across the Island one-of-a-kind with a cultural DNA unlike any other. The Island has more than 70 museums and 50 art galleries that contain works ranging from ancient Indigenous and African, to Baroque and Victorian, and contemporary works of art,” Discover Puerto Rico wrote.

For global artists interested in joining the “Blank Canvas Initiative,” Discover Puerto Rico welcomes them to contact

Oligopoly: When Maritime Shipping Options Shrink

The Port of San Juan (Juan José Rodríguez/CB)

A special investigative report on the Puerto Rico Trade

Editor’s note: This report first appeared in the Oct. 17 issue of Caribbean Business.It was made possible in part by a grant from the Center for Investigative Journalism and with the support of Internews, the Center for Disaster Philanthropy and NetHope.


The Federal Maritime Commission (FMC) is evaluating different alternatives to obtain more information about the agreement between two of the main companies that operate at the Puerto Nuevo, San Juan, cargo pier.

However, the chairman of the federal entity, Michael A. Khouri, warned Gov. Wanda Vázquez Garced that if, as it seems, the transaction is actually a merger of companies or a purchase of assets, the FMC may not have the authority to stop the agreement between Luis Ayala Colón (LAC), the company responsible for loading and unloading international ships at the Puerto Nuevo pier, and Puerto Rico Terminals, a subsidiary of Tote Maritime, the second-largest company that operates the domestic cargo terminals in the Port of San Juan.

The FMC’s concern over service being affected and that freight costs to and from Puerto Rico would be increased was expressed by Khouri in a letter he sent to Vázquez on Oct. 1.

The “Commission will insist on enhanced monitoring with extensive disclosure of business and marketplace information. The Commission is also exploring other avenues to develop additional information about the agreement,” such as an investigation and hearing or a special report, “(known as a Section 15 Order) requiring the parties to provide information to the Commission,” Khouri said in his letter to the governor, which her office, La Fortaleza, made available to the Center for Investigative Journalism (CPI by its Spanish initials).

Khouri was responding to the letter Vázquez Garced wrote to the FMC on Sept. 19, requesting it to intervene to ensure the transaction between Puerto Rico Terminals and LAC does not affect consumers on the island.

The governor told the commission that although former Gov. Ricardo Rosselló did not object to the transaction and refrained from submitting comments about the possible impact on the market and the island’s economy, given the concern expressed by several sectors, she must ensure “this transaction does not adversely impact the people of Puerto Rico.”

If the FMC lost jurisdiction, both the U.S. and Puerto Rico departments of Justice could intervene because the controversy would become about the possible concentration of economic power, which involves problems with the exercise of free enterprise.

“That would be the responsibility of the antitrust division of the Department of Justice of Puerto Rico and federal Justice,” explained the expert in corporate law and former director of the Ports Authority, attorney Carlos Díaz Olivo. The legal fight, the lawyer said, could be initiated by either the Government of Puerto Rico or an affected competitor.

The local Justice Department has had an investigation into the transaction underway since April.

What is the agreement about

The cooperative working agreement to create a new company, Puerto Nuevo Terminals, was presented to the FMC at the beginning of 2019. Ports Authority Director Anthony Maceira said the Puerto Rico government learned about the transaction in March, and on Rosselló González’s orders remained on the sidelines and presented no opposition. The issue was also not considered by the Ports’ board, Maceira said in his deposition to the House Committee on Federal Affairs, which is investigating the possible impacts of the agreement.

Ports Authority Director Anthony Maceira (Juan José Rodríguez/CB)

Under the Puerto Nuevo Terminals LLC (PNT) Cooperative Working Agreement, LAC and Puerto Rico Terminals (PRT) form PNT, with its membership units held 50/50 by the two owners. PNT will acquire, through assignments, leases, subleases, transfers and other corporate means, all terminal services agreements, land leases, cranes, yard equipment and other related assets from the LAC and the PRT, according to the document presented to the FMC. Much of that equipment belongs to TOTE Maritime, co-owner of the PNT.

TOTE is in turn part of Saltchuk Resources, an umbrella company that includes Foss, Northern Aviation Services, Hyak Supply Chain, Tropical Shipping and NorthStar Energy.

According to’s database of campaign contributions, between 2015 and 2019, Saltchuk donated $15,500 to Resident Commissioner Jenniffer González’s campaign. Among donations González has received through political action committees (PACs), Saltchuk is the main contributor, followed by Crowley Maritime and Seafarers International Union. González said she has no comment on the agreement because it is a matter of “pure state jurisdiction.”

LAC is in the process of negotiating a collective bargaining agreement with its employees.

When PNT starts operating, it will be responsible through its single management team and board for negotiating and entering into all terminal services agreements, crane and other yard equipment purchases or leases, coordinate labor for on-dock stevedoring and all other matters related to the operation of a marine container terminal. At that time, LAC and PRT will “withdraw from that business, leaving the PNT and Crowley…as the only two container terminal operators” in Puerto Rico, as put by the FMC.

The agreement to create PNT entered into force Aug. 29, but as of press time, the company did not yet appear as incorporated in the State Department registry, although the name does appear separately.

Despite its concerns, the FMC allowed the transaction, as its members “did not reach consensus on the threshold question of whether the agreement comes within Shipping Act jurisdiction. Next, a majority could not determine that we have enough information and evidence at this time to go to Federal Court to seek an injunction to prevent this agreement from going into effect. We understand what the parties are trying to achieve, but serious concerns remain about the implementation of the agreement,” Khouri previously explained.

The FMC is composed of four members, all appointed by the president of the United States.

Although its meetings are mostly public and can be accessed online, when passing judgment on the PNT agreement, the commission conducted its vote through an alternate procedure, according to the Federal Register.

“The PNT agreement was done as a ‘notation item,’ [with] each commissioner submitt[ing] a vote sheet with his or her vote. Considering items by notation is a common procedure at the FMC for handling agreements and is done frequently. There was no meeting where the PNT agreement was subject to a vote,” the FMC told Caribbean Business.

Freight costs triple after Hurricane Maria

Control over port activity in Puerto Rico is not only an element that defines the economic situation of the island, but is also a matter of survival.

After Hurricane Maria devastated Puerto Rico, diaspora groups organized to send supplies to the island. One of those groups was the Sunset Park Relief organization in New York. It had begun collecting supplies for those affected on the island after Hurricane Irma two weeks earlier. Two months later, sending supplies was still urgent.

The cargo was valued at more than $1 million, and they were charged $7,800 to transport it from Jacksonville, Fla., to Puerto Rico a month after Hurricane Maria. The Sunset Park Relief Coalition in New York had begun collecting supplies for those affected on the island after Hurricane Irma, and two months later, it was urgent to send these.

UTRA President Germán Vázquez (Juan José Rodríguez/CB)

“In the hurricane, I paid. I did. They didn’t tell me; I paid $7,800 for a [cargo] container to Puerto Rico…. That’s a lot. That’s $7,800 for a container from Jacksonville to here,” said an indignant Germán Vázquez, president of the Transportation & Attached Branches Union (UTRA by its Spanish acronym), who in coordination with Sunset Park organized the transportation and distribution of aid to hurricane victims.

The amount paid was three and a half times more than the average estimated cost for this type of transportation using U.S.-flagged ships and 10 times more than shipping the merchandise using international vessels.

According to a survey by Advantage Business Consulting—commissioned this year by the Chamber of Food Marketing, Industry & Distribution (MIDA by its Spanish acronym)—a 40-foot container that transports nonrefrigerated cargo from Jacksonville to Puerto Rico has an average cost of $2,114 using U.S.-flagged ships, or $755 using international ships.

Among the stories about the aftermath of the recent hurricanes, one that is repeated frequently, is related to the problem of handling merchandise and donations at the piers. The issue has again become part of public discussion with the recent announcement of the concentration of power in the island’s ports—in the hands of practically two companies—Crowley, which operates eight vessels, and Tote Maritime, which runs two ships on a regular basis.

Maritime shipping companies are governed by the U.S. Shipping Act, which establishes the general rules under which the industry operates, and leaves the responsibility of establishing the applicable regulations to the Federal Maritime Commission (FMC).

When the Puerto Rico government sold its shipping companies in the 1990s, about 30 were operating on the island. That number has dropped to only four: Tote Maritime and Crowley, which between them serve 95 percent of the maritime cargo; as well as Trailer Bridge and National Shipping. These four companies transport merchandise, or commercial, industrial and private supplies, which arrive or leave the island on U.S.-flagged vessels and are subject to the Jones Act. While marine support services company Luis Ayala Colón (LAC) attends to cargo that arrives on international ships.

The Puerto Rico Ports Authority is the local government entity called upon to ensure the island’s air and maritime infrastructure serve the needs of the people of Puerto Rico—with the right to develop, own, upgrade, operate and manage them. However, in the case of the piers, it is Ports’ duty to ensure their operation does not hinder or threaten economic development by jeopardizing the entry or exit of commercial and industrial supplies, according to Act 125-1942, as amended.

Under Ports’ purview, there are 37 piers around the island. The Ponce, Mayagüez and Ceiba piers are under the jurisdiction of the Municipality of Ponce, Mayagüez Port Commission and Maritime Transportation Authority, respectively. Only the Puerto Nuevo and Isla Grande piers in San Juan are used for general cargo, or consumer goods and supplies for companies operating in Puerto Rico. Only light cargo comes through Mayagüez and Ponce.

TOTE (formerly Sea Star), rents the Puerto Nuevo pier, which pays the government $35 million for its lease, from December 2012 to 2032.

Through its Puerto Rico Terminals (PRT) subsidiary, TOTE provides cargo services to Trailer Bridge and National Shipping vessels. International ships are served by LAC employees.

The Isla Grande Pier, nearly 79 acres at the former naval base in San Juan, is leased to Crowley for $56 million for the period of September 2016 to September 2046. Crowley has the largest operation on the island.

Asked if both companies are up-to-date with their payments, Ports Authority spokesman José Carmona referred the question to the legal division.

Historical oligopoly

In the interview for this investigation, Eduardo Pagán Reyes, TOTE vice president & general manager, Caribbean Services, Puerto Rico, and president of the Puerto Rico Shipping Association, acknowledged that the island’s maritime cargo industry operates as an oligopoly, or a system in which the number of sellers is very small and, thus, control and corner sales of certain products as if they were monopolies.

“Many people make the comment that this is a monopoly. No, this is not a monopoly; it is an oligopoly. A monopoly would be a single company, when you have two, three, four, maybe you can call it an oligopoly. What people don’t know is that here there are more than 20 [U.S.] American companies that could come to Puerto Rico and establish operations, but the investment they would have to make is in the $1.5 billion range. This is not selling cellphones in a corner. These are not just ships—we are talking about ships, equipment, containers, cranes—the array of expenses is significant,” he added.

Eighty percent of the merchandise that leaves or arrives in Puerto Rico comes from the Port of Jacksonville. The other ports with service to the island, although on a smaller scale, are Pennsauken, N.J.; Houston and Philadelphia.

In 1996, however, Puerto Rico also received merchandise from the ports of Elizabeth, N.J.; New Orleans, Miami, South Carolina, New York and Baltimore.

The laws of Puerto Rico establish that the island’s ports and piers are in the public domain and cannot be sold to private entities. Until 1994, the ports were operated by the Puerto Rico Maritime Cargo Transportation Authority. That year, the government created a public corporation, Navieras de Puerto Rico, which assumed that responsibility until 2001, when it filed for bankruptcy, after which, Sea Star Line Agency (SSA) acquired the contract Navieras had with the Ports Authority in December 2012.

The contract was signed by the vice president & general manager of Sea Star, Eduardo Pagán Reyes. The agreement granted that company the use of about 59 acres in the Puerto Nuevo area of the San Juan Port, for a $35.4 million, 10-year lease with the option to extend it twice for an additional five years, or a total of 20 years.

In 2006, Sea Star established a joint agreement with the other shipping companies that use the Puerto Nuevo pier so LAC, National Shipping, Island Stevedoring, Horizon Lines and Trailer Bridge could dock and use SSA’s facilities and cranes.

The agreement with SSA was amended in 2016 to stipulate the company had become TOTE Shipholdings, which thereafter assumed the contract to operate the Puerto Nuevo pier.

For its Puerto Rico business, TOTE has two ships and six cranes for loading and unloading cargo from its ships and Trailer Bridge and National Shipping’s barges. Port operations for TOTE, Trailer Bridge and National vessels are offered through the PRT, which is also run by Pagán Reyes.

For its local operations, Crowley has four ships and four barges, cargo containers, three cranes, and trucks for land transport through its subsidiary Crowley Logistics.

In 2013, federal Judge Daniel R. Domínguez sentenced the former president of Sea Star, Frank Peake, and five other people to serve prison sentences, ranging from seven months to five years, for their participation in a conspiracy to fix rates and surcharges for freight shipped from the Jacksonville Port to Puerto Rico between mid-2005 and April 2008.

Thomas Farmer, the former vice president of price & yield management of Crowley, was indicted in March 2013 for his role in the conspiracy but a jury acquitted him in May 2015.

The executives and three companies (Sea Star, Crowley and Horizon Lines) involved in the price-fixing scheme have paid more than $46 million in fines for their participation in that conspiracy, which included setting freight service rates, rigging bids submitted to Puerto Rico freight services customers and other practices in violation of the antitrust laws of the maritime shipping industry.

Barely transparent

Finding information about these companies’ operations is an ordeal because they are mainly governed by the Shipping Act, which was amended in 1984 to deregulate the industry.

As recently as Oct. 1, a Surface Transportation Board (STB) order entered into force that requires shipping companies to make their rates accessible to the public. The website to see TOTE’s rates is There, visitors can see the rates for several customers after signing in with a provided username and password. Finding out the rate for a specific shipment is very complicated.

“The numbers [rates] we have are from a survey [of importers and exporters]. The official data are not public,” said Manuel Reyes, vice president of MIDA.

Manuel Reyes, the executive vice president of MIDA, has denounced that shipping companies keep the cost of their services hidden. (Juan José Rodríguez / CB)

The MIDA survey by Advantage Business Consulting found the average cost for a dry container (which is not refrigerated) is $2,114, while a refrigerated container could cost about $5,210.

Through its spokesperson in Puerto Rico, Nelly Cruz, TOTE told Caribbean Business and CPI that its cargo rates “vary depending on several factors, including volume and the type of product shipped, the season, equipment required and many other specifications. Almost all freight shipped by TOTE between Jacksonville and San Juan is defined within confidential shipping agreements, or contractual rates.”

In Crowley’s case, the company provides basic rates on its website, but reaches private agreements with most of its regular clients, an STB spokesperson confirmed.

“There should at least be statistics but, unfortunately, there are none. Puerto Rico lives with its back to the island’s reality. The Department of Economic Development cannot go to an investor and tell them how much the freight costs are to and from Puerto Rico,” Reyes said.

When asked about the rates that inform potential investors, who want to come to the island and establish a manufacturing plant, for example, Economic Development Secretary Manuel Laboy indicated he understood the rates were published on the respective shipping companies’ websites.

“For [Hurricane Maria], in theory, the importers had a contract with their transportation company, with a price that was already established, but what would happen is they would be told: ‘I have no capacity, so I cannot bring it to you,’” Reyes explained about businesses which, despite having contracts with a shipper, were told after the hurricanes that there was no room in their vessels, but the merchandise could be brought in rented ships, which raised the previously agreed pricing.

Asked about businesspeople who could be interviewed and provide evidence about this practice, Reyes replied: “To the extent that none of this is regulated, and is so monopolized, those affected are afraid to speak because they depend on those companies to bring in their goods.

“An importer who has no control or bargaining power because he is fighting against an oligopoly, if he faces them, the danger of an adverse reaction is too great. They say it in private, but they won’t say it publicly,” MIDA’s Reyes added.

In an interview with Caribbean Business, TOTE’s Pagán Reyes said the rates and reports on the shipper’s operations are periodically submitted to the Ports Authority and Treasury Department.

For this investigation, Ports was asked to provide the number of containers and cargo moved from 2016 to date. It sent a table with the total load per year but not by company, nor the detail of the monthly movement.

When asking about the rates, the Ports’ spokesperson said that specific information was not held by the agency.

Ahead of a new emergency

In the state of Florida, the Puerto Rican Professional Association (Profesa) recently established an initiative—with the support of Jacksonville Port and shipping companies—to educate community groups about the procedure for sending donations to Puerto Rico in case of an emergency.

Rafael González, president of Profesa, admitted that after Hurricane Maria, many of the donations never left the port, although he could not give specific numbers. He explained that some donations had to be returned due to lack of funds to pay for shipping to the island and others because they were not documented as required by federal law.

“When Maria [hit], the diaspora here [stateside] overwhelmingly gave donations and then did not know what to do with them,” said Dr. Thomas Agrait, Profesa’s vice president of Governmental Affairs.

Agrait said that after Hurricane Maria, TOTE and Crowley would charge $5,000 to $6,000 for a shipment of unrefrigerated donations to Puerto Rico.

González said they met with the administrators of the Port of Jacksonville to define protocols to expedite these shipments in emergencies. He also said that when he met a week ago with Puerto Rico Ports Director Maceira, he said any related negotiation should be done with the companies that operate the Tote and Crowley piers.

Agrait said the issue of rates for that cargo was discussed at that first meeting. “We know the rates are a crucial issue and we prefer to leave them aside to be more effective, but it is not something we should ignore facing the future,” he said.

Hands off

Puerto Rico Ports Authority Director Anthony Maceira admitted there is a need for the government to take a more active role in controlling operations, which was discussed with the private sector just after Hurricane Maria.

“But the reality for decades in Puerto Rico has been that [the ports] is operated by private entities,” he said.

Likewise, he stressed that even when wanting to change public policy so the government retakes control of operations at the piers—as it did before Navieras was sold—the island’s financial reality prevents making an efficient operation viable.

When questioned about Ports’ debt, Maceira did not want to go into detail about current figures, alleging the authority is amid negotiations with its creditors. However, in a statement, the Fiscal Agency & Financial Advisory Authority wrote that the pre-agreement with bondholders includes those issued through the Infrastructure Financing Authority (AFI by its Spanish acronym) for the benefit of the Ports Authority, and an interagency Ports loan with AFI for $190.6 million.

The Ports Authority debt, including the AFI loan, totals $455 million. The agreement for the debt has been extended several times, the agency said, as it “continues to work with internal approvals, that of the Fiscal Oversight Board and the process of gathering information necessary for closing the transaction.”

“We will always be watchful that the business that is done complies with the law and, if at any time something is detected that we understand is outside the [legal] framework, we would make the relevant referrals because we do not have jurisdiction to enforce compliance. And I have to be very careful with what I say in that regard because what I say or don’t say can have an effect on the market and I have to be responsible in that regard,” Maceira said.

Questioned about the PNT joint venture during a public hearing held by the island’s House of Representatives, Maceira admitted he did not raise concerns with the FMC about the transaction despite it threatening to increase the oligopoly in that industry, nor did he bring up the transaction with Ports’ government board for evaluation.

Part of the Ports agreement includes using the revenue generated by leasing the Puerto Nuevo area property that Puerto Rico Terminals uses for its operations as a partial source of repayment for bonds issued in the future. In return, the creditors will contribute new capital for capital improvements, in addition to using 10 percent of the annual income of said properties for capital improvements through the 25 years considered in the debt-restructuring agreement. The negotiation also requires a valuation of this income, which is still underway.

In a statement in August, one of the FMC commissioners, Daniel B. Maffei, said the PNT “agreement certainly reduces competition, so the question is whether there is a likelihood that this reduction in competition would produce either an unreasonable reduction in transportation service or an unreasonable increase in transportation cost, or substantially lessen competition in the purchase of certain services.”

Besides the FMC chairman, Maffei was the only commissioner who issued a public statement opposing the agreement.

Crowley and TOTE operations include rentals of cargo containers to transport on their vessels from Puerto Rico to the ports of Jacksonville, Houston and Philadelphia, and back; the unloading of freight and its storage, if necessary; and cargo delivery to customers.

Some of these companies, such as Trailer Bridge and Crowley, provide door-to-port or door-to-door service, which is taking merchandise from the customer’s door to the door of the recipient in Puerto Rico or from the stateside customer’s door to the pier in San Juan.

Commissioner Maffei voted against the agreement, arguing the potential effects were reason enough to intervene. He pointed to the fact that the parties in the new agreement are both carriers and pier operators, saying the “consolidation of purchasing power” in the Port of San Juan could put newcomers “at a substantial disadvantage and thus trigger a violation of the new prong of § 41307(b)(1) created by the [Frank] LoBiondo [Coast Guard Authorization] Act,” which covers antitrust restrictions on cooperation between ocean carriers and marine terminals on harbor services.

“Given that a major party to the agreement is itself a carrier, it may have incentives to keep other carriers out and would therefore not limit price increases based on this tension. Furthermore, if a carrier found the prices too high in Puerto Rico as a result of this agreement and made the business decision to stop service, it may not have a substantial negative impact on that carrier because Puerto Rico is a small portion of overall trade for any major carrier, but it could conceivably lead to an unreasonable reduction in service to the people of Puerto Rico,” he added.

The governor said in her letter to Khouri that she instructed the island’s Justice Department, “specifically the Antitrust Division, to continue its ongoing investigation” to “ascertain any violations of Puerto Rico’s antitrust statute.”

Khouri responded that the FMC was working on a statement to present to the Justice Department, but reminded her that the “Commission is prohibited from sharing some information by statute and for several other reasons I know you will understand related to the operation of a deliberative body. I assure you, however, that the Commission will be as responsive as possible to your interests and agency’s request.”

Liberty Puerto Rico Speaks About its AT&T Acquisition


Assures Transition Will be Smooth, but Does not Clarify Future Changes

Editor’s note: This report first appeared in the Oct. 17 issue of Caribbean Business.

If you are one of the more than 1.1 million AT&T subscribers in Puerto Rico and the U.S. Virgin Islands or form part of the 1,300-strong workforce the telecom giant employs for those markets, you will not see changes in your service or at work, for now.

After news spread about the telecom provider reaching a definitive agreement with Liberty Latin America to acquire its wireless and wireline operations, doubts have arisen regarding the next steps for the latter company, which is on the doorstep becoming a major communications and entertainment conglomerate in the Caribbean.

What do we know? The acquisition of AT&T’s operations will entail an all-cash $1.95 billion deal, plus fees and expenses, a transaction that could occur in the next six to nine months, if the Federal Communications Commission (FCC) and U.S. Department of Justice give the go-ahead. The transaction is thought to ameliorate the debt resulting from AT&T’s $85 billion acquisition of Time Warner Inc. last year.

In July, Reuters reported that its sources said AT&T was exploring the possibility of selling its assets in Puerto Rico and the USVI for $3 billion. However, Liberty’s chief of communications said AT&T had denied that information and focused on the matter at hand: Is this transaction a good deal for Liberty in Puerto Rico and Latin America?

“The AT&T network is in very good condition and there has been a lot of investment in its network after the hurricanes. We would benefit from that investment that AT&T already made in its network. Likewise, we made very large investments; the network, which as you know was at zero, was fixed and, in less than a year, was able to be rebuilt. That is one of the positives that this combination would have, that we would be having two networks in very good condition, the best fixed network with the best mobile network, and it would become a single network that would bring more redundancy and more resilience if we were to have to face an emergency such as a natural disaster again,” Giovanna Ramírez de Arellano, director of communications & corporate responsibility for Liberty Puerto Rico, told Caribbean Business.

Although the acquisition does not include AT&T subsidiary, satellite-TV provider DirecTV; the relationships and responsibilities assumed by the network dedicated to emergency response, FirstNet; nor the Global Business customers of AT&T, the resulting fusion represents the birth of a stronger and competitive market player brought to the game, a move that could be confused with a monopolistic practice but, in the opinion of Liberty Puerto Rico’s management, is an incorrect assertion because the deal involves the acquisition of products and services Liberty did not previously have.

“I would not like to talk about other companies but what I can say is that we do not expect that there will be many challenges with that [anticompetitive advantage claims] because we really are entering a complementary business. The competitive environment will remain basically the same and some other mergers that have occurred lately are national; this is only about Puerto Rico and is a bit smaller in terms of reach,” Ramírez de Arellano said.

In early 2017, an agreement was announced between Sprint and PRWireless Inc., better known as Open Mobile, joining their businesses in Puerto Rico and the USVI, a business that sought to offer better wireless coverage, increase speeds and technological capabilities and better serve the interests of its customers, especially business clients. It is unknown whether that transaction, which was disclosed in 2017, finally materialized. What is known is that today AT&T remains the fastest wireless network and has the greatest coverage in Puerto Rico, based on research firm Ookla’s “Speedtest Intelligence” analysis for the third quarter of 2019.

“The combination of AT&T’s leading mobile and wired businesses with Liberty Puerto Rico’s leading high-speed broadband and TV business will create a strong and competitive integrated communications player,” said Balan Nair, president & CEO of Liberty Latin America, in a press release. “At Liberty Latin America, we are focused on investing in digital infrastructure, innovation and 5G networks, and on delivering a friendly customer-service experience. This transaction is evidence of that, and we are confident this new combination will be good for our customers and our employees, including those joining us from AT&T.”

Meanwhile, AT&T Chief Financial Officer John Stephens described the transaction as a “result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization” that “only made sense if we received a fair value from a buyer that is committed to taking this well-run business, with its skilled employees and loyal customer base, and help it thrive. Liberty Latin America has a strong reputation for quality of service, and we believe they have the experience to build on the success of these operations,” he added.

What we still don’t know

After the general facts of the sale were revealed, the public’s opinion has been monitored by Liberty Puerto Rico, which assured that until the spring of 2020, there is no reason to worry because no existing services will undergo changes. In addition, the company will respect AT&T employees’ collective bargaining agreement, which remains in force until 2023.

“It’s too early to talk about that but right now there is no plan for [personnel] cuts. They [AT&T employees] have an agreement signed until 2023 and it is valid. What I can assure you is that we need the talent and experience of the AT&T employees and we know that it is a very committed and very professional workforce and we count on those resources.”

Regarding the possibility of pricing changes, Ramírez de Arellano did not elaborate on whether it is in upcoming plans.

“For now, the two companies are still separate. I cannot comment on what the fees will be because it is too early to talk about that, but what I can tell you is that both companies are known for providing a lot of value for the money, with quality products and excellence, and we will continue that way.”

AT&T enjoys proven credibility in its customer service area locally. How will Liberty maintain that level of satisfaction, CB asked.

“What we have seen in general is that our customers feel confident because we have not seen an increase in calls by our customers to our call centers. We believe that our clients feel confident and are used to the [level of service] we provide them, to our services, to the innovative products we have. We have seen uncertainty in certain comments on social media, but we must explain that nothing changes for now. An agreement was signed that now has to go into the regulatory process. At least until the second quarter of 2020, the two companies [will] remain completely separate; there can be no integration, and everything remains business as usual,” the executive said.

After that period of calm, the operational transition will begin at full steam, a process to which “AT&T committed to supporting Liberty for three years, to ensure it happens in a fluid, easy way and without interruptions to the service that affects the customers.”

In terms of marketing, will AT&T cease to exist and now be called Liberty? CB asked. Silence was followed by: “We don’t know” and a laugh. “At this point, I still can’t answer that question. The AT&T brand will continue for a while; this will not be immediate, but yes, eventually, with time and the transfer, it will have to change,” concluded Liberty Puerto Rico’s communications chief.

Lufthansa Technik Puerto Rico inks 5-year MRO deal with Allegiant Air

Economic Development Secretary Manuel Laboy; U.S. Ambassador to Germany, Andreas Siegler; Richard Grenell, Consul General for the Government of Germany; Gov. Wanda Vázquez, Carsten Spohr, CEO and Chairman, Lufthansa Group; Pat Foley – CEO, Lufthansa Technik Puerto Rico; and Christian Daoud, Allegiant Maintenance Director (Courtesy)

To continue servicing carrier’s Airbus A320 fleet

SAN JUAN — Lufthansa Technik Puerto Rico has signed a five-year agreement with Allegiant Air to provide its maintenance, repair and overhaul (MRO) services to the airline’s fleet.

The announcement was made by the Lufthansa Group President and Executive Director Cartsen Spohr and Lufthansa Technik Puerto Rico CEO Patrick Foley. Gov. Wanda Vázquez and Economic Development Secretary Manuel Laboy attended the announcement.

Inaugurated in 2015, Lufthansa Technik Puerto Rico’s state-of-the art facility in the Rafael Hernández Airport in Aguadilla employees about 400 specialized workers. The company has continuously expanded its facility and now runs five overhaul lines specializing in MRO services for the Airbus A320 range of short and medium-range aircraft. 


Las Vegas, Nevadabased Allegiant Air operates flights from more than 110 U.S. cities. According to Lufthansa Technik’s March and April issue of  “Connection,” in 2018, the airline changed its fleet “to a pure A320 family…. Now, with more than 75 A319 and A320 aircraft, the carrier has put some of the base maintenance services for its fleet into the hands of Lufthansa Technik Puerto Rico, the facility in Lufthansa Technik’s base maintenance network specializing in Airbus A320 family aircraft for the Americas region.” 


“You have shown your commitment to Puerto Rico and its people in many ways,” Vázquez said. “Particularly after Hurricane Maria, Lufthansa Technik opened for business just three weeks after the hurricane devastated the island.”

U.S. Ambassador to Germany Richard Grenell, meanwhile, said Lufthansa has created about 15,000 jobs in the United States, adding, “We want to grow…and our focus was to do that here.” 

Germany-based Lufthansa Technik is considered among the top leading aircraft engine, component, heavy airframe and line maintenance providers in the world.

“Lufthansa Technik Puerto Rico is a brilliant example of the Lufthansa Group partnership with the local community in Aguadilla with the government of Puerto Rico and with the federal government,” Spohr said.

In 2017, Lufthansa launched the Aguadilla Institute of Aeronautical and Aerospace (IAAPR by its Spanish acronym) training program with the University of Puerto Rico (UPR). The program allowed for the formation of highly trained aviation mechanics. 

“I thank Lufthansa for selecting our island for its operations and for its confidence to do business in Puerto Rico,” Vázquez said. “It is an important investment and contribution for our island. Thank you for the trust and commitment to our people, and you have the Economic Development and Commerce [Department] and the government of Puerto Rico’s support.”

Laboy, meanwhile, said that the aerospace industry in Puerto Rico continues to grow. 

“This sector directly employs about 5,000 highly skilled and committed workers,” Laboy said. “We will continue to support this sector through multiple resources and initiatives such as the Incentives Code, which is available to make Puerto Rico one of the main places to offer services to the aerospace sector, as our location is ideal for servicing aircraft from both North and South America.”

Laboy added that in 2018, the aerospace industry exported about $500 million.

Resident commissioner, Puerto Rico gov discuss alternatives to halted $1.5B in federal Education funds

Resident Commissioner Jenniffer González (Courtesy)

Government faces various hurdles before receiving federal allocations

SAN JUAN — Resident Commissioner Jenniffer González and Gov. Wanda Vázquez Garced met this week to discuss how to resume the flow of federal funds for the island’s Department of Education, the disbursement of which was halted because the Puerto Rican government failed to assign a spending monitor.

González said the governor put forth a discovery process to identify the most critical areas for the island’s Education Department and talks are being held with representatives of the U.S. Department of Education to gain access to at least a portion of the funds with priority to cover special education.

“The governor suggested to me, and I believe it is a good alternative, that instead of putting in place a federal monitor, that Puerto Rico is classified as a ‘high risk’ [jurisdiction], which was one of the actions discussed before the governor came into power. What that does is that when the government spends, it asks for reimbursement with the invoice. That is less harmful than [freezing] the funds completely,” González said.

She also said that “the other alternative that the governor proposes, which I think is very correct, too, is that because the most urgent are the special education funds and they were able to identify some items that could reach half of the funds needed, but an amount is still missing, that the Department of Education then [releases] a percentage.”

At the beginning of this summer, the U.S. Education Department decided that the funds sent to the island would have to be administered by an outside fiduciary agent, a measure used when federal agencies have concerns regarding the handling of its allocations. Because the Puerto Rico government never finalized a contract with a company approved to monitor the $1.5 billion in federal funds for Education, its disbursement was halted.

The requirement of a fiduciary, or financial monitor, is not considered  receivership, which is lower than the island education system’s current classification.

In addition to the internal strategies to unfreeze the funds, González said U.S. Education reps will be visiting the island next week to reassess the matter.

Health and housing, too

Besides the public education funding issue, Puerto Rico is also about to see a reduction in Medicaid funds on Nov. 20, when the temporary 100 percent Federal Medicaid Assistance Percentage for the island’s Vital healthcare program expires. If the continuing resolution is not passed, the matching rate would drop back to 55 percent, resulting in the government of Puerto Rico having to seek funds to cover 45 percent of Vital’s expenses.

In early September, Puerto Rico was about to run out of healthcare funds, but Congress included them in its continuing resolution to fund the federal government. That resolution covers until Nov. 20. The commissioner, as well as representatives of the island’s public and private sectors are advocating the approval of the Territories Healthcare Improvement Act, which would give the island $3 billion annually for four years.

The measure’s bill is in the House Energy and Commerce Committee, and González said she will be meeting with Sen. Charles “Chuck” Grassley, who chairs the Finance Committee and has sent several letters to the U.S. Department of Health and Human Services, questioning the allocation of funds to the island and focusing on government transparency.

On Aug. 2, the U.S. Department of Housing and Urban Development (HUD) announced its plan to appoint a federal financial monitor to oversee the disbursement of disaster recovery dollars to Puerto Rico.

“Given the Puerto Rico government’s alleged corruption, fiscal irregularities and mismanagement, we will appoint a Federal Financial Monitor to oversee the disbursement of all HUD disaster recovery funds,” said Secretary Ben Carson. “The Federal Financial Monitor’s guidance, coupled with our new, improved financial controls, will ensure recovery funds get to the people who need them most and protect taxpayers who are footing the bill.”

HUD said the monitor would have “extensive legal, accounting, construction management and audit oversight experience and be tasked with ensuring the efficient, effective, and accountable use” of federal funds.

The minefield in Puerto Rico Electric Power Authority privatization

Low appetite for generation, unfunded pension liabilities hard to digest.

Is it food yet at Prepa Diner?

The transformation of the Puerto Rico Electric Power Authority (Prepa), a work in very slow progress two administrations in the making, is a path lined with mines that threaten to blow the entire process to kingdom come. The bankrupt utility has a fiscal plan that establishes as priorities overarching goals of “reforming the energy sector” through transactions related to transmission & distribution (T&D) and generation assets; delivering a revised integrated resource plan (IRP) and the finalizing of a preliminary restructuring support agreement (RSA) with Prepa’s various creditor groups.

All this is yet to take place against the backdrop of creditor constituents who claim a lien on their assets, while Prepa seeks $14 billion—seemingly $9 billion is a more realistic number—in reconstruction funds from the Federal Emergency Management Agency (FEMA) to storm-harden and overhaul the fragile grid.

The utility had already secured the passing of the Puerto Rico Energy Public Policy Act in March 2019. Although that law set a rather ambitious renewable energy target of 100 percent by 2050, Prepa’s use of renewables in 2019 is a mere 2 percent. Many indicators suggest a move to natural gas, with renewables a mere afterthought to be kicked down the road for future administrations.

Naturally gas

“We are bringing in natural gas to be the dancing partner of the growth of renewables because it’s the cheapest and cleanest [fuel apart from renewables],” Prepa Executive Director José Ortiz told Caribbean Business during a recent interview. “You have to bring in natural gas while you eliminate oil-fired units. With today’s technology, it’s very difficult [to aggressively bring renewables into the mix], but in 30 years I have no doubt that you will be able to operate 100 percent with renewables with the technology that should be developed by then.”

Suscribe to read the rest of this report here, in the Oct. 3 issue of Caribbean Business.

San Juan mayor: The fiscal board must disappear

San Juan Mayor Carmen Yulín Cruz (Jaime Rivera/CB)

SAN JUAN — The mayor of San Juan, Carmen Yulín Cruz Soto, sent a letter to Senate President Thomas Rivera Schatz that included a draft of a concurrent resolution seeking that the legislature issue a statement defining the payment of pensions, education, safety and healthcare as essential services, in accordance with the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).

“Matters related to the payment of pensions, health, safety and education should be considered as essential services. However, this concept has served as an excuse to favor private interests over the needs of our people. An expression by the Legislative Assembly would strengthen the people’s call to protect these services and also help the Human Resources Committee of the federal chamber [House of Representatives] and its chairman, Raúl Grijalva, to amend PROMESA and force the Board to assume the responsibility and guarantee financial resources for these services,” Cruz wrote to the Senate’s leader.

In the letter, the mayor also referred to subsection (b) of Section 201 of Promesa, which requires the Financial Oversight and Management Board (FOMB) that it established to guarantee sufficient funds to cover essential public services.

“The Board, in clear defiance of the legislative mandate, has not only evaded defining this concept clearly, but has also implemented austerity measures that have had the effect of harming the delicate fiscal situation of organizations that provide essential services to citizens,” the letter reads.

The mayor also said Promesa establishes parameters for designing the respective fiscal plans of each “covered entity,” which must “provide adequate funds for public pension systems.”

“The text of the law in this sense is not ambiguous. Precisely because of its clear and precise language, we can conclude that there is no room for discretion. I repeat, the Board must disappear, but as long as it stays we have a responsibility to fight for the interests of Puerto Ricans,” the San Juan mayor concluded.

Puerto Rico, USVI responders getting fire equipment after EPA settlement

Total is providing $110,000 worth of gear

SAN JUAN – The Environmental Protection Agency (EPA) announced that Total Petroleum Puerto Rico Corp. will provide the island’s Public Safety Department, and the Aircraft Rescue and Fire Fighting Department of the Virgin Islands Ports Authority with $110,000 worth of emergency equipment as part of a settlement of alleged violations of the Resource Conservation and Recovery Act (RCRA) governing handling hazardous waste.

Total Petroleum is a distributor for gas stations and aviation fuel supply at the Luis Muñoz Marín International Airport in Carolina, Puerto Rico; the Guaynabo Bulk Terminal, in Guaynabo, Puerto Rico; and the Cyril King Airport in Charlotte Amalie in St. Thomas, USVI.

“This settlement ensures that Total Petroleum is complying with hazardous waste laws at the same time it provides a concrete benefit to the communities in areas in Puerto Rico and the U.S. Virgin Islands where the company supplies fuel,” said EPA Regional Administrator Pete Lopez. “Through this settlement, we are not only reducing the chance of a mishap resulting from poor hazardous waste practices, we are also improving emergency preparedness at these facilities by improving the equipment that would be used to respond to any mishaps at these facilities.”

The new equipment and gear will aid responders in addressing fires and emergencies that may cause serious damage to properties, human health, and the environment.

According to the EPA, in August 2015 and March and April 2017, the agency inspected the three facilities and cited Total for six violations: failure to make a hazardous waste determination; operation of hazardous waste storage facilities without a RCRA permit; failure to minimize risk; failure to have a proper contingency plan; failure to maintain containers with hazardous waste closed and in good condition; and, failure to comply with universal waste management requirements.

Total has corrected the violations and has committed in the settlement to maintain compliance. The settlement includes a penalty of $180,000 for past violations.

Tropical Storm Karen floods streets across Puerto Rico


Leaves some areas in southeast with up to 5 inches of rainfall

SAN JUAN — Tropical Storm Karen was expected to produce additional rainfall Wednesday in Puerto Rico, where the system left roads across the island flooded Tuesday.

These rains may cause flash flooding and mudslides, especially in
mountainous areas, the National Hurricane Center said, adding that some areas in southeastern Puerto Rico received up to 5 inches of rainfall.

Several major roadways were impassable Tuesday, and National Weather Service meteorologist Ernesto Morales explained Tuesday that the rainfall’s resulting soil saturation can lead to flash floods and landslides.

“Although there are going to be windy moments, it is not the important danger or the biggest impact from Karen. Really, what concerns us is the expected rain,” Morales said, adding that in the “afternoon, we are going to see that these showers turn more copious and more frequent.”

The system is expected to produce rain until Wednesday, with high humidity possibly lasting until Thursday. As a result, there’s a flash flood warning for Puerto Rico, including Vieques and Culebra, and the USVI. Likewise, the threat of landslides could last through the weekend.

During her second press conference Tuesday, Gov. Wanda Vázquez announced that the number of shelters had grown from 35 to 67, at the request of the mayors, and there were four medical shelters—in San Juan, Fajardo, Ponce and Arecibo. The shelters were equipped to receive people who would need to power medical equipment. There were 46 people in nine of the shelters Tuesday.

Puerto Rico Electric Power Authority director José Ortiz indicated that the some 1,500 customers lost service due to issues unrelated to the storm and argued that on any given day about 3,000 customers lose service because of maintenance work.

Regarding the Guajataca Dam, which sustained severe damage from Hurricane Maria in 2017 and is not fully repaired, Emergency Bureau Commissioner Carlos Acevedo said the U.S. Army Corps of Engineers inspected the dam and found no problems. Guajataca’s three warning alarms are operational, he added.

About 900 people had lost water service because a pipe broke as a result of the magnitude 6.3 earthquake north of Isabela, Puerto Rico, late Monday evening.

Since Monday, the government had ordered a prize freeze on essential items, canceled classes in the public school system and work in government agencies. Work resumed Wednesday but classes were still canceled.

The island’s main banks in the east area did not open Tuesday; however, those in the rest of the island remain open. Some businesses also closed, while others opened regularly or for limited hours, such as Plaza Las Américas, the largest shopping mall on the island, which closed at 3:30 p.m. Tuesday and was closed Wednesday.

—Efrén Rodríguez contributed to this report.