FEMA says assistance to Puerto Rico power utility to continue regardless of offers
SAN JUAN – Alejandro De La Campa, a Caribbean area division director for the Federal Emergency Management Administration (FEMA) said Wednesday that the agency will assist the Puerto Rico Electric Power Authority (Prepa) regardless of other financial offers provided to the utility.
“We are going to be offering our aid as it is requested under FEMA parameters. Any other aid that Prepa gets should be welcomed,” he told Caribbean Business.
A Prepa bondholder group has offered a $1 billion loan to the utility, as well as relief on existing bonds after Hurricane María virtually destroyed its electric grid. The funding, the group said, would allow the public corporation to provide the required matching funds under various FEMA grants, enabling it to qualify for at least $3 billion, and up to $9 billion in emergency funds.
The loan carries no principal or interest obligations for two years, but one of the conditions in the offer is that once Prepa emerges from Title III bankruptcy under Promesa, the loan will be repaid.
While President Trump has exempted Puerto Rico from having to match FEMA’s financial aid to repair public infrastructure and homes with local funds, the group noted that the exemption is only for 180 days, after which Prepa will need large sums of funding to rebuild its systems and carry out long-term capital infrastructure projects.
“The idea behind this is for Prepa to get matching funds as well,” a source with knowledge of the offer said, adding that even without FEMA funds, federal funds take time.
Another source who worked on the utility’s overhaul and streamlining over the past two years, says the utility has a $550 million account set aside that is accessible to begin recovery efforts while FEMA funds arrive.
The bondholder source, however, noted that the utility’s creditors are making the offer even though Prepa, through the Financial Oversight and Management Board, rejected the agreemnet reached with creditors to restructure the utility’s $9 billion debt.
Prepa Executive Director Ricardo Ramos said he did not know anything more about the offer than the details mentioned in news reports.
“I have not seen it,” he said. However, the source said communications on the offer began Wednesday and had not been discussed with the utility.
“We welcome and appreciate the expression of support from creditors,” said Natalie Jaresko, the board’s executive director said regarding the loan offered to help repair the electric grid. “The Board will carefully consider all proposals in coordination with the Government, but it is still very early as we begin to navigate a way forward following the catastrophic impact Hurricane Maria had on the Island.
“PREPA’s leadership and employees are working extremely hard together with the government and FEMA to deal with the catastrophic damage to the Island’s power,” Jaresko continued in the release.
“But it is important to remember that PREPA’s infrastructure was outdated and fragile before the hurricanes and that the Board has been working with PREPA and the Government on a full operational and financial transformation plan for the utility. Nevertheless, we are moving with a great sense of urgency to assess the Island’s immediate rebuilding and longer-term needs for transforming the electricity sector.”