La Fortaleza signs PRASA Revitalization Act into law
Puerto Rico Acting Gov. Víctor Suárez, signed House Bill 2864 into law Wednesday, creating the Puerto Rico Aqueduct and Sewer Authority Revitalization Act, a statute that gives the water utility the tools to access capital markets and achieve self-sustainability.
The signing comes about seven months after the bill was filed at the House of Representatives and following several weeks of clashes between lawmakers, utility executives and the governor’s office over the terms of the statute.
The new Law 68 of 2016 is expected to steer a reform at PRASA, so it may solve its liquidity problems through the restructuring of existing debt and new financing to be obtained through bond issues conducted by an independent securitization vehicle the law creates.
The Act allows PRASA to seek up to $900 million in new debt to cover, among others obligations, the development of its Capital Improvements Plan, pay some $150 million it owes suppliers and contractors, which has halted infrastructure development work needed to keep the operation going and comply with regulatory standards.
“In addition, with the implementation of the industry’s best practices and technologies, PRASA may continue to provide an efficient, safe, and reliable service that is favorable for the environment and especially rate stability for consumers. All of these efforts will result in stimulating economic growth,” La Fortaleza said in a statement issued following the signing.
The law also allows PRASA to finance the difference between the $900 million and the 20 percent of billed charges to cover costs related to restructuring all or part of its outstanding debt with creditors.
PRASA Executive Director Alberto Lázaro had previously said the financing tools the Revitalization Act provides should keep a water rate increase off the table for the time being.