Puerto Rico strikes to denationalise troubled energy firm

Church's Chicken Helping to Serve Communities Across Puerto Rico

Puerto Rico Governor Ricardo Rossello said he's moving to privatize the assets of the island's electric company, the utility that was so badly damaged by Hurricane Maria that millions were left in the dark.

"The Puerto Rico Electric Power Authority (PREPA) has become a heavy burden on our people, who are now hostage to its poor service and high cost", Rossello said in a televised address. "What we know today as the Puerto Rico Electric Power Authority does not work and can not continue to operate like this".

Last year, Rossello successfully fought to keep control of the power company, convincing a judge to block a takeover by the federal oversight board that is in charge of restructuring the bankrupt island's $74 billion public debt. But Puerto Ricans in a flurry of exchanges across social media after Monday's announcement seemed to agree that any change would be a good one, though they remained wary that the utility could fall into the wrong hands. "We are proud to provide support to the residents of Puerto Rico during this unprecedented time".

The deadline for PREPA, Puerto Rico Aqueducts and Sewers Authority (PRASA) and the Commonwealth to submit their revised fiscal plans following Hurricane Maria's destruction is on Wednesday. The privatization process will begin "in the next few days" and occur in three phases over the next 18 months, the governor said.

"The maintenance of its infrastructure was practically abandoned over the past decade", Rossello said. "The energy system is not designed for the needs of the Puerto Rico of today".

"With this transformation of PREPA, you will cease being its hostage", he said.

"If we want to facilitate the creation of new jobs and encourage investment on our Island, we have to change the obsolete energy system of the past, to one that serves as the engine of the economy, both for the reliability of those who produce energy, and for the commitment of the Government to regulate and stimulate a modern energy industry", Rossello said.


Sen. Juan Dalmau, whose party supports independence for Puerto Rico, said privatization would not necessarily translate into efficiency or savings. The lack of power is the central obstacle to resuming normal life.

Union leaders said they wouldn't comment until Tuesday. "While Puerto Rico may attempt such an end-around maneuver, we doubt that it would pass muster with the courts", Palmer, who covers MBIA and Assured Guaranty, said.

The company also has faced internal turmoil.

Its director was forced out in November after the utility failed to immediately call for help from its mainland counterparts after the storm.

Founded in 1979 as a public utility run by appointees of the island's governor, PREPA has always been criticized for political patronage and inefficiency. It was also beset by frequent blackouts, including an island-wide outage in September 2016. But Puerto Rico has been privatizing the operations of some government agencies in recent years amid a recession that has lasted more than a decade, including management of the main worldwide airport and one of its main highways. Then, the governor said they will evaluate the offers based on their technical, economic and financial evaluation.

Proceeds from the sale of assets and contracts would be "used to capitalize the retirement funds of employees", Rossello said.

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