Proposed Prasa P3 Project Cancelled

Fontanés: Improving Finances Make Private Management of Utility ‘Unnecessary’ 

SAN JUAN — The executive director of the Puerto Rico Public-Private Partnerships Authority (P3A), Fermín Fontanés, announced this week that the agency cancelled the process to hire a private consortium to manage the Puerto Rico Aqueduct & Sewer Authority (Prasa), determining that the proposed public private partnership was “not necessary” given Prasa’s improved finances and access to federal disaster reconstruction funds.  

As recently as last February, Fontanés told Caribbean Business that the P3A was in the final stage of negotiations with four consortia vying for the Prasa contract, which, among other aims, sought to upgrade metering technology to reduce the utility’s staggering loss of water and revenue due to leakage, theft and misbilling.  

In a statement issued on Monday, Fontanés said that Prasa “has managed to significantly improve its fiscal condition” due to lower debt costs after refinancing transactions during the past year involving “modifications of its obligations” with the federal Environmental Protection Agency (EPA) and the U.S. Department of Agriculture’s Rural Development. The water utility managed to regain access to capital markets after the refinancing of a “substantial portion” of its main debt through Title III under the federal 2016 Puerto Rico Oversight, Management and Economic Stability Act (Promesa), he said. 

Moreover, the Federal Emergency Management Agency (FEMA) assigned $3.7 billion in disaster reconstruction funds to Prasa, resulting in the “strengthening of the utility’s liquidity.” 

Fontanés explained that in June 2018, the P3A published a request for qualifications to identify proponents qualified to participate in a public-private partnership for “the optimization of the water consumption measurement system and the management of the commercial operation” of Prasa.  

“At the time, [Prasa] was going through a precarious financial situation that made it impossible for it to access the necessary funds needed to carry out necessary capital improvements,” he said in the statement. “Moreover, the impact of hurricanes Irma and Maria in 2018 increased the need for [Prasa] to secure revenues and identified a possible investor from the private sector.” 

Fontanés said that after carrying out a viability analysis of the water utility public-private partnership project, the P3A concluded that “it will not be necessary” to continue with the process, given that Prasa has the “ability to defray the cost of purchasing and installing the intelligent meters and related infrastructure” with the federal funds assigned by FEMA. 

“The P3 is confident regarding improvements to Prasa services that could soon materialize in the face of the fiscal changes and access to federal funds,” the P3A chief said. 

‘Confidence’ in Utility 

Fontanés said last week that due to the magnitude of the damages inflicted by the 2017 hurricanes, Prasa, along with the Puerto Rico Electric Power Authority (Prepa) and the commonwealth Education Department participate in a special FEMA process called FAST — FEMA Accelerated Award Strategy. 

The executive director of the Puerto Rico Public-Private Partnerships Authority (P3A), Fermín Fontanés Gómez, said last week that the final selection of an operator, or operators, of Prepa’s oil- and gas-powered plants was put off until early next year due to bidding companies requesting to inspect the generation facilities anew as a result of doubts raised after the energy crisis of August and September. 

Prasa Executive Director Doriel Pagán Crespo announced Sunday the latest bids for utility infrastructure projects totaling $70.3 million, which include the completion of the extension to the sanitary sewer system in the northwestern part of Añasco, the improvements to the Cerro Gordo system, the design and construction of tanks for the eastern and southern regions, and the design and construction for the rehabilitation of the sanitary trunk in Vega Baja and the improvements to the structure of Jaguas Ceiba. 

The funds for these projects come from FEMA, the EPA’sClean Water State Revolving Fund, as well as from Prasa’s own funds. 

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