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Fiscal board: Zamot won’t start at Puerto Rico power utility until court acts

By on October 31, 2017

Revitalization Coordinator Noel Zamot (Juan José Rodríguez/CB)

SAN JUAN – Puerto Rico’s fiscal control board made it clear Tuesday that until the court does not authorize it, Noel Zamot will not begin his new role overseeing the Electric Power Authority (Prepa).

Likewise, the board said that for the time being, it is not interested in appointing an administrator for any Puerto Rico government entity.

The statements from the fiscal panel created by federal law came about during its 10th public meeting, in which it discussed the restoration of the island’s electric grid after Hurricane Maria destroyed it, the future of Prepa and the naming of the utility’s “chief transformation officer,” who made his first presentation after being appointed.

“Although the board has nominated and appointed Noel, nothing takes place until a court confirms the decision. So until that time there should be no concerns or confusions,” said board Executive Director Natalie Jaresko, who assured that Zamot had not interfered with any process at Prepa, as suggested by the administration of Gov. Ricardo Rosselló Nevares.

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Moments before Zamot made his presentation of the public power utility in the meeting, the government representative to the board, Christian Sobrino, intervened to warn the body about the consequences its actions on the matter could have.

“There are demoralized people,” Sobrino said at a press conference after the meeting. “They feel they don’t have to obey certain orders in the chain of command. Officials wonder whether to ask for approval for an action from the executive director or now Noel Zamot. Partisan issues also arose,” he added.

Sobrino, who is also president of the Government Development Bank (GDB), reiterated that the appointment was “futile,” and warned about the precedent that could be set with the move federal Judge Laura Taylor Swain has yet to rule on. On Nov. 13, the court will hold a hearing on the request made to the judge to authorize Zamot’s appointment.

“What they have done forewarns because it has led to worse working conditions at Prepa. It has caused completely unnecessary instability. In what universe does one announce an appointment without having the legal authority to do so?” Sobrino questioned about the issue that reveals an existing amount of friction between the government and the board.

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To questions about why the board would prevail in court over the appointment of Zamot, board legal adviser Jaime El Koury pointed to the Promesa law and a recent decision by Judge Swain rejecting a request from a creditor group to have a receiver appointed for Prepa.

He explained that as part of the bankruptcy process under Promesa’s Title III, consent of the board is needed for the judge to authorize a person to take over the entity. He added that this was recently decided by the court when it rejected the creditor request for a receiver, which did not have the board’s consent.

“We are proposing the chief transformation officer, so we are actually giving our consent under that provision. Secondly, under the general powers of Title III proceedings, the board, as the representative of Prepa, we believe we have the right to request the chief trasnformation officer,” El Koury said.

Chairman José Carrión then said Prepa’s “transformation” of is the board’s “duty.”

Not the administration’s fault

Carrión also said the decision to appoint Zamot to Prepa was not in response to mismanagement by the Rosselló Nevares administration, but rather an intention to harmonize the work carried out in the short term, after Hurricane Maria, with future plans the board has for the utility.

“The people know that for the past few years we’ve had difficulties with Prepa and the system we had did not serve us well,” the chairman said.

For her part, Jaresko said that to complete the public corporation’s bankruptcy process, it is necessary to incorporate short-term needs and funds from the federal government with the restructuring plans that existed before the hurricane.

For this, Zamot explained it will be necessary to review the “transformation plan” that had been drawn up for Prepa and the energy sector, which would be incorporated into the “adjustment plan” at the end of the Title III case. Meanwhile, a revised fiscal plan for Prepa must be submitted by Dec. 22, as requested Tuesday by the board.

Amid a new period for the utility and Puerto Rico’s power infrastructure, Carrión indicated that the board should ensure that the federal funds received are managed “in a manner that is understood to be used by federal taxpayers so we can have a modern system and not have to return to Washington in the future to make another rescue request for Prepa.”

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