Revitalization coordinator takes center stage?
By Eva Lloréns Vélez and Philipe Schoene Roura
SAN JUAN — As the Associated General Contractors (AGC) lobbies Washington, D.C., for Puerto Rico to be used as a “pilot project” in President Donald Trump’s major infrastructure plans, the role of Promesa’s revitalization coordinator takes on a more pressing need.
Earlier this week, the island’s financial control board announced the appointment of Puerto Rican Noel Zamot as the new revitalization coordinator, as defined under Promesa’s Title V.
According to the federal law, the governor will appoint the coordinator from a list comprising three candidates selected by the board. As of presstime, the other two names were not made public, although Gov. Ricardo Rosselló endorsed Zamot’s selection.
Zamot, a Massachusetts Institute of Technology and University of Michigan graduate, has more than 25 years of experience in aerospace and defense infrastructure. He founded Corvus Analytics, a consulting firm specializing in cyber-risk. Zamot also served as a colonel in the U.S. Air Force.
Energy could very well soon be added to his résumé, as Promesa mentions the energy sector as critical for Puerto Rico and in need of revamping.
For instance, the oversight board turned down a deal between the Puerto Rico Electric Power Authority (Prepa) and its creditors to restructure the utility’s roughly $9 billion debt because members wanted more investment for infrastructure overhaul on behalf of the creditors.
“What they are seeking now is a combination between major investment from creditors and P3s [public-private partnerships] that could be brought together. If creditors provide a bit of support for transmission and distribution through public-private partnerships, you could see new money for combined-cycle units. That is the vision right now,” a source with knowledge of the matter told Caribbean Business.
Despite the board’s vision for Prepa’s overhaul, some projects that have been targeted are not regarded in the same way by the utility’s executives and the Puerto Rico Energy Commission (PREC).
Push and pull between Prepa and PREC
Since the passing of Promesa in June 2016, there has been a tug-of-war between Prepa and PREC over the ultimate control of revamping the utility’s decrepit generation infrastructure.
Sources close to the matter confirmed that the amount of investment for infrastructure became a bone of contention as the utility’s fiscal plan was being tweaked prior to certification by the board. Prepa Executive Director Ricardo Ramos, moreover, included many projects in the fiscal plan that PREC had insisted be kept out. These include the Aguirre Offshore GasPort and new generation units at the Palo Seco powerplant.
Promesa, however, establishes that the revitalization coordinator has the final word on critical infrastructure projects, whether energy or not. “Under Promesa, all of that goes to hell; if Prepa wanted to, it could bypass the energy commission—the buck stops with the revitalization coordinator,” said an adviser with ties to the Rosselló administration.
The role of the coordinator becomes more important as Prepa’s overhaul takes place within the context of a fiscal plan that is steeped in hardship under Title III bankruptcy proceedings. “If you look at the amount of investment in the fiscal plan for infrastructure overhaul, it is greater than that which was contained in the Integrated Resource Plan,” added the government adviser.
Other Caribbean Business sources said the first infrastructure projects ready to go to bids under Promesa’s Title V would be unrelated to energy. The list includes a new ferry system, an electronic traffic fines system and the proposed student housing project at University of Puerto Rico’s Mayagüez campus.
“There are going to be eight projects,” noted Ricardo Álvarez, president of the P.R. Builders Association, who highlighted the industry’s high expectations.
AGC President Francisco Díaz Massó praised a recent executive order signed by Gov. Rosselló, which declares a state of emergency to expedite the projects’ permits, in line with Promesa’s Title V provisions.
“We see this as a positive first step, but we insist upon the list of 20 projects that we have proposed,” he said. The AGC recently unveiled an initial list of projects related to highways, water and energy, including the waste-to-energy plant in Arecibo and the Aguirre Offshore GasPort.
Díaz added that his organization is lobbying the White House and Congress in favor of a proposal to designate the island as a pilot project in Trump’s multibillion-dollar initiative to revitalize infrastructure. “We are proposing a pilot project to start [on the island] to optimize services,” he said.
Trump has yet to release specifics about what he calls his $1 trillion infrastructure plan or the timing, but has emphatically embraced P3s as a solution to a problem the president has called critical.
For his part, Rosselló has said his administration is embarking on an aggressive plan to establish P3s in a wide range of areas. He told a media outlet in Washington that the island is in need of energy generation, but the infrastructure for such projects would cost $800 million.