Friday, December 2, 2022

CNE: Prepa Debt Cut Should Be Deeper

By on April 1, 2022

At Least 44% Needed to Make Utility Solvent, Think Tank Says

A new restructuring support agreement (RSA) for Power Authority (Prepa) would have to cut the utility’s $9 billion legacy debt by at least 44 percent to avoid excessive rate increases being foisted on customers and allow proper financing of utility infrastructure, according to Sergio Marxuach, public policy director at the San Juan-based think tank Center for a New Economy (CNE).

This proposed cut contrasts with the 32 percent debt reduction contained in the 2019 Prepa RSA, which Gov. Pedro Pierluisi canceled on March 8. His administration attributed the decision to changes in the economic underpinnings of the deal, which was reached nearly three years ago in 2019, while citing “worldwide economic conditions, such as rising inflation and significant surges in the price of crude oil,” since then. Local lawmakers from all parties opposed the deal.

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