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Gov’t Eyes P3s for Highways, Regional Airports, Medical Center

By on January 17, 2017

SAN JUAN – Following its so-called Plan for Puerto Rico’s commitment to prioritize the concession of public assets and services to the private sector, the Ricardo Rosselló administration will soon announce potential projects for public-private partnerships (P3s).

Highways, ports, schools, regional airports, national parks, the former U.S. Navy base Roosevelt Roads, health facilities—including the Río Piedras Medical Center (Centro Médico)—as well as solid waste, technology, water and energy projects are some of the areas under evaluation, Public-Private Partnerships Authority Executive Director Omar Marrero told Caribbean Business.

“We have a number of projects already identified that are going to be announced soon, for which we have not only done the analysis to comply with the Law of P3s, but also on June 30, the governor told us ‘go back to the drawing board’ and analyze now whether it meets Title V of Promesa. That analysis was made particularly on a number of projects that are well advanced,” he said.

Omar Marrero Díaz was selected by the governor to lead three public corporations. (Juan J. Rodríguez/CB)

Omar Marrero Díaz was selected by the governor to lead three public corporations. (Juan J. Rodríguez/CB)

However, Marrero did not comment further on specific P3 initiatives in the pipeline. He only mentioned a solid waste project in Toa Baja that will be handled in conjunction with the municipal government.

“All highways are being considered” to enter into this type of transaction, including PR52, the official said. Yet the Rosselló administration’s plans transcend Puerto Rico’s highways, including many areas that “are not the essential services that the government should be concentrating on” and where the private sector “can deliver better, more innovative services,” according to Marrero.

Pledged assets pose challenge

While he believes P3s will allow public entities to cut “considerably their debts and achieve fiscal responsibility,” Marrero admitted that the number of assets subject to liens poses “a challenge” to achieve P3s. Many of the government’s existing assets are pledged or tied to the payment of debt issued by various public entities.

“In the analysis of the highways, for instance, whereby resources or assets are already pledged, it is a more difficult challenge when it comes to monetization,” he said while distinguishing between existing operations or assets known as “brownfields” and new projects—“greenfields.”

“With assets and income pledged, that’s part of the challenge. We have to look at other financing and if we cannot touch [some assets], we have to look at other projects so we can correct the fiscal situation and restructure those operations, and reassess it,” Marrero said.

Regional airports

Marrero, who is also the executive director of the Ports Authority, noted that the number of these facilities would be reduced.

“[Thirteen] airports are a substantial number for Puerto Rico’s territorial extension. We believe we can lower it,” he noted, adding that of those 13 facilities, three have been already shut down and sold for other uses. The Federal Aviation Administration already approved the latter.

“I think there is still an opportunity to go a bit lower and optimize what we have,” Marrero stressed, while emphasizing the importance of maintaining the airports of Vieques, Culebra, Isla Grande, Ponce, Aguadilla and Ceiba.

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