Hearings to privatize Puerto Rico power company begin
SAN JUAN – With the overwhelming endorsement of House Bill 1481 by various agency officials, hearings began Tuesday over a measure authored by the majority party to establish the legal parameters for public-private partnerships with the Puerto Rico Electric Power Authority (Prepa) and open up the island’s energy market.
After the Government Development Bank (GDB), the Fiscal Agency and Financial Advisory Authority (AAFAF), the Public-Private Partnerships Authority (AAPP) and the Justice Department supported the bill, everything seems to indicate that the sale of the public corporation is imminent.
The hearings were convened by the Puerto Rico House Economic Development, Planning, Telecommunications, Public-Private Partnerships & Energy Committee, chaired by Víctor Parés, and the Government Committee, chaired by Jorge Navarro.
“Puerto Rico’s electric power system collapsed. It no longer works, and with a corporation in bankruptcy,” Parés said at the beginning of the hearing, “I think we have the opportunity to change that and do it as a priority amid what we have faced and lived through with the passage of [Hurricane] Maria.”
The first witness called was Prepa Deputy Director Justo González, who praised the bill and assured it was is the right step toward strengthening the island’s grid.
“It will be possible to carry out the entire transformation of the energy system that is needed in Puerto Rico and it is consistent with the vision for the energy future that was recently adopted by Prepa’s Governing Board,” González said.
“With a new electric power system, losses are minimized. All this must be thought of for the benefit of the people of Puerto Rico,” he added.
The official further said the privatization of the utility, which according to the administration has an about $14 billion debt, would make it possible to leave the fragile economic situation in which it finds itself and offer Puerto Rico a new alternative to conduct business.
In addition, González indicated that the participatory public-private partnerships concept is key for the corporation’s recovery in the short and medium terms and indispensable for its long-term transformation.
Meanwhile, Justice Secretary Wanda Vázquez endorsed the draft proposal from the legal point of view and assured the bill establishes the legal framework to probe the market and open the call for companies interested in participating in the transformation of the electrical system.
“We recognize the need for this legislation to be approved in order to address the urgent need to provide better services to the public and that this can be realized without delays that affect the public interest,” Vázquez said.
Regarding the public utility’s employees, the Justice secretary stressed that during the transition process the rights acquired by Prepa employees will be guaranteed.
The government’s economic component, composed by the GDB, the AAFAF and the AAPP, presented its joint endorsement and said the legislation’s approval would be beneficial.
Omar Marrero, the executive director of AAPP, stressed “it is extremely important that Prepa transactions be carried out efficiently while ensuring transparency in the processes. The public-private partnership structure we are proposing allows for precisely that, insofar as it provides an efficient, competitive and open process that has already been proven successful in the past.”
Marrero further stated that the Puerto Rico energy industry will undergo significant changes as a result of the AEE Transactions.
“In all likelihood, they will require modifications to the regulatory framework. Partnership contracts awarded as results of Prepa transactions will be responsibly audited,” he said.
In response to questions from Parés about what specifically will be sold by the utility, the AAPP’s executive director said it would be the corporation’s power generation assets.
However, following Marrero’s testimony, Popular Democratic Party minority Rep. Luis Vega Ramos denounced that the bill does not mention that the privatization of assets would be limited to those that produced electric power.
Meanwhile, the spokesman of the Puerto Rican Independence Party (PIP), Rep. Denis Márquez, said that he and the institution he represents have historically defended and maintain that Prepa should remain a public corporation.
In his turn to debate, Popular Democratic Party (PDP) Minority Spokesman Rafael “Tatito” Hernández stressed that “the element of transparency is important,” adding, “We can present bipartisan amendments to include a transparency mechanism.”
GDB and Aafaf Chairman Christian Sobrino replied to the lawmaker that “we are always available to the members of the committees to be able to fulfill the objectives of the bill.”