Puerto Rico general fund to provide liquidity to electric, water utilities
SAN JUAN – The Puerto Rico central government will lend money to the Electric Power Authority (Prepa) and the Aqueduct and Sewer Authority (Prasa) due to the precarious liquidity situation both public corporations face, La Fortaleza confirmed in a press release Wednesday.
This is the intention behind a new bill the administration of Gov. Ricardo Rosselló will introduce to ensure the continuity of the utilities’ operations.
“In the case of Prepa, its liquidity will not allow it to continue the recovery work or the provision of services in February if the central government does not lend it money,” the governor said in a written statement about the legislative measure that aims to provide relief to the public corporations until they receive funds under federal Community Disaster Loans (CDLs).
Rosselló called on the U.S. Treasury to expedite the granting of these loans managed by the Federal Emergency Management Agency (FEMA) and that would inject immediate liquidity to the central government, agencies, municipalities and public corporations.
“We are calling on the federal government and the Treasury to expedite their internal processes so they can inform us of the financial terms and guarantees they need to get the assistance approved by Congress and the president of the United States to Puerto Rico,” the governor added about the more than $4 billion the government could access through CDLs.
Caribbean Business learned that government expects Treasury to indicate the terms under which the loans would operate by the end of the week.
According to the governor’s office, La Fortaleza, the federal agency has already agreed that a new structure within the central government would be the recipient of the CDLs approved. Although early in the week, Public Affairs Secretary Ramón Rosario said that the legislative measure to create the new entity would be presented Tuesday, the governor said Wednesday that it will not be filed in the Legislature until the terms of the Treasury are known.
In the case of the municipalities, they would have access to funds under the CDL program, but the loans would be capped at $5 million.
The CDL program seeks to help U.S. jurisdictions that have experienced a marked loss of income in the aftermath of natural disasters. The money from these loans can only be used for operational expenses, including payroll.
“The Government and public corporations have seen a decline in their revenue and an increase in expenses to address the emergency and recovery after the passage of Hurricane María last September,” Rosselló said in reference to the public utilites’ financial condition.
Both the Rosselló administration and the island’s fiscal control board have warned in recent months that after María, the coffers of both public corporations could end up in the red by the end of the year.