Puerto Rico oversight board certifies water utility’s fiscal plan
Calls for efficiencies, revenue-raising measures and use of federal funds to revamp infrastructure
SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced Wednesday that it certified the fiscal plan for the Puerto Rico Aqueduct and Sewer Authority (Prasa). The fiscal plan outlines operational efficiencies, measures to increase revenue and the use of federal disaster-relief funds to improve or rebuild damaged infrastructure.
Prasa is one of the island’s public corporations designated as covered entities subject to oversight under the Puerto Rico Oversight, Management and Economic Stability Act (Promesa), which created the fiscal board. It’s public debt amounts to about $4 billion.
“PRASA has made measurable progress against its fiscal plan targets, but it’s still in a vulnerable position,” board Executive Director Natalie Jaresko said. “Complete and timely implementation of the savings and revenue enhancing measures in the fiscal plan will bring PRASA towards a path of financial sustainability and get it closer to becoming a sustainable, efficient and resilient utility providing safe and affordable drinking water for the benefit of all its customers.”
Prasa is expected to implement a public-private partnership agreement by the end of the year, in which metering and customer service will be outsourced to “improve customer satisfaction and meter accuracy, all the while reducing cost to PRASA and improving system efficiency,” the board said in its press release.
“The Certified Fiscal Plan protects consumers by maintaining affordability, while ensuring PRASA is able to afford much needed investments in its infrastructure,” Jaresko said. The fiscal plan provides for capital investments totaling $2.3 billion over the fiscal plan period of five years, “while identifying the need for some debt restructuring to enable affordable, sustainable debt service,” the release reads.
“As a result of Hurricanes Irma and María, an unprecedented level of federal aid has been made available to Puerto Rico to rebuild its infrastructure and ensure its resiliency, reliability and capability,” Jaresko said. “Accordingly, PRASA should endeavor to maximize the use of these cost-efficient, readily available funds at a time when Puerto Rico needs it most.”
The Fiscal Plan projects $435 million in additional federal funds to be received from fiscal years 2020-2024, including access to a repayment fund.
“Continued capital under-investment has increased the vulnerability of PRASA’s already large and complex infrastructure,” Jaresko said. “Implementation of initiatives to increase revenues and reduce costs through operational efficiencies, coupled with maximizing efficient use of federal funding, should help turn the situation around.”