U.S. Congress Raises Concerns Over Prepa Privatization
Editor’s note: The following article originally appeared in the Feb. 8-14 print edition of Caribbean Business.
Given the fact that legislation to enable the privatization of the Puerto Rico Electric Power Authority (Prepa) may come after the controversial overhaul of the Energy Commission (PREC), which regulates the energy industry, there may not be the required scrutiny and analysis of the offers made by prospective Prepa bidders, which may result in a bad deal for Puerto Rico.
That was one of the concerns raised by congressional members Nydia Velázquez, Raúl Grijalva and José Serrano in a letter after the governor announced Prepa’s privatization. The Financial Oversight & Management Board last week objected to commonwealth plans to overhaul PREC, giving the government 30 days to come up with another bill that would ensure PREC is a separate agency with strong regulatory powers. The governor has yet to respond to the request. La Fortaleza’s bill to overhaul PREC is under evaluation by the Legislature and has received opposition.
The congressional members raised concerns as they questioned Prepa’s proposed privatization, which will be enabled through legislation that also calls for proceeds from the sale to pay for pensions.
The three U.S. lawmakers asked if there was an analysis of Prepa’s conditions to indicate there will not be a repeat of the failures of two attempts to privatize the Aqueduct & Sewer Authority. How will the government ensure transparency of the privatization process? How will the new umbrella entity that will regulate Prepa be an independent entity and regulate the private energy market?
Rep. Victor Parés, who is chairman of the House Economic Planning, Telecommunications, Public-Private Partnerships & Energy Committee, said he supports keeping PREC as a strong regulator, expressing reservations about La Fortaleza’s bill. “I think it can still remain a strong entity even if it is merged [with another agency],” he said.
–Read the rest of the story in CB’s epaper here.
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