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PREPA spent $192M on unused lands, unfinished projects, Comptroller’s audit says

The Puerto Rico Electric Power Authority spent $192 million to buy land or to develop projects that were not built or completed, according to an audit by the Puerto Rico Office of the Comptroller.

The report reveals that PREPA spent $62.2 million in the cancellation of the Gasoducto del Sur natural gas pipeline project, disbursed $31.9 million in the Vía Verde project that never got off the ground, and paid $85.5 million in purchases and services for the unit conversion project at the Cambalache, San Juan, Palo Seco and Aguirre power generation plants, which it later canceled.

The Comptroller’s report also revealed that, two years after PREPA cancelled the Gasoducto del Sur project, the Puerto Rico Aqueduct and Sewer Authority (PRASA) disbursed $51.8 million to buy some of the assets and for the credit line that it took over from PREPA.

PRASA sold 35 pipes to PREPA for $45,500, since they could not be used to carry water. The Comptroller’s auditors confirmed that the tubes were in disuse and deteriorated in Warehouse 5 of the Palo Seco power plant.

The audit also stated that PREPA acquired two wind turbines in 2011 for $3.7 million, one of which is installed to serve PRASA’s Used Water Treatment Plant, and the other is stored at the Palo Seco power plant.

In 2011, PREPA paid $2.1 million for six plots of land and buildings adjacent to its headquarters in Santurce, which are abandoned and in disuse, and are not registered in the public corporation’s accounting system.

“From the examination of the minutes of the Board, we found a lack of details and documentation on the considerations and negotiations to cancel contracts, or the methods of selecting contractors,” the Comptroller’s Office said.

“These situations are due to the fact that convenience and feasibility studies were not carried out, and the associated costs and economic impact on PREPA were not considered. Furthermore, the Board did not require the impact studies, nor did it protect the agency’s best interests,” the Comptroller stated in its report.

Contrary to contracting laws and regulations, PREPA did not request proposals from at least three professionals for any of the services contracted in the development of the Vía Verde Project, the Comptroller further stated.

“In addition, payments were identified prior to entering into contracts, and that the executive director had not submitted a contract for an amount greater than $500,000 for Board approval. From 2009 to 2012, PREPA had formalized 15 contracts and seven amendments,” it added.

PREPA did not provide auditors with evaluations of a contractor’s administrative, operational and financial capacity to develop Via Verde, who was paid $12.5 million. In addition, the public corporation spent $393,630 on advertising and planning services, over what was contracted, the Comptroller’s Office said.

The audit revealed that PREPA failed to comply with the principles of transparency and accountability established by Law 57-2014 on Energy Transformation and Relief.

As of Dec. 10, 2019, the corporation did not have written norms or procedures to govern the processing of the information that by law is required to be published, and it had not published 188 contracts and amendments for $1.9 billion on its website, which were noted in the Puerto Rico Office of the Comptroller’s contract registry.

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This story was written by our staff based on a press release.

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