December 13, 2018 Read More →

Recent developments show progress for Puerto Rico utility

The Bond Buyer ($):

The Puerto Rico Electric Power Authority moved closer to restoring its credit, as it canceled a plan for a natural gas port and received five bids for its transmission and distribution system.

The developments are both financially positive for the authority, Moody’s Investors Service analyst Rick Donner said Tuesday. Last month the authority canceled a plan to build a natural gas port that had been criticized as costly and possibly inflationary, depending on gas prices, and on Dec. 6 the governor announced the authority received the bids for its grid.

Puerto Rico’s Public Private Partnership Authority will evaluate the bids, [Gov. Ricardo Rosselló] said. Puerto Rico hopes to pick one of them by December 2019, Donner said.

How this process and the sale of PREPA’s power generation facilities will affect the debt isn’t fully clear yet, Donner said. The local government plans to use some of the proceeds to pay off the debt. How much of the debt could be paid off this way remains to be seen.

In late November PREPA canceled plans for building an offshore natural gas port at Aguirre, on the south coast. The authority had been preparing for this port since 2010 and it was its chief planned capital project since at least 2012.

“Natural gas investments in Puerto Rico are expensive and risky,” said Tom Sanzillo, director of finance at Institute for Energy Economics and Financial Analysis. “The island’s fiscal plan prioritizes renewable energy investments because they are cheaper and anti-inflationary. If implemented it gives Puerto Rico a fighting chase to recover and grow.”

More ($): PREPA’s moves to rebuild its system seen as positive

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