Gov. Ricardo Rosselló introduced a measure to the Puerto Rico Legislative Assembly that would allow the central government to issue loans to the Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico Aqueduct and Sewer Authority (PRASA).
The measure seeks to assist these two public corporations — with liquidity problems due to the catastrophic events — to continue providing their services after Hurricane María.
“The government and the public corporations have seen a reduction in their income and an increase in expenses to deal with the emergency and recovery after the passage of Hurricane María last September,” the governor said.
“We have been responsibly making fiscal and managerial adjustments to incentivize the economy and maintain government operations,” he added. “However, corporations such as PREPA and PRASA are experiencing short-term and medium-term liquidity problems to continue repairing the damages and providing service to their customers.”
Rosselló said they continue waiting for the final determination from the U.S. Department of Treasury of what the conditions will be to access the federal aid approved by the U.S. Congress in October 2017.
This aid aims to destine approximately $4.7 billion to Puerto Rico under the Community Disaster Loans program (CDL).
The Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA) has held conversations with U.S. Treasury over the past few months to facilitate the aid to the government of Puerto Rico, which would be the recipient of the funds that will aid the agencies and public corporations.
“We’re calling on the federal government and the U.S. Treasury to expedite their internal processes so as to inform us of the financial terms and guarantees they need to provide Puerto Rico the aid that Congress and the president of the United States approved,” Rosselló said.
Likewise, the governor added that “the Treasury has already notified us of the legal structure of the program so that the government is the recipient of the funds and assists the government entities.”
“FAFAA has held conversations with U.S. Treasury officials and is awaiting for the notification of the terms and conditions required to assist public entities following the passage of Hurricane María,” he said.
Once they have the final guidelines of the U.S. Treasury, a legislative measure will be introduced before the Legislative Assembly, he added.
The governor explained that the fiscal situation of PREPA and PRASA requires immediate action and cannot wait any longer for an action by the U.S. Treasury.
Therefore, legislation has been introduced to allow the central Government to lend money to these corporations that need assistance, while the mechanism for the CDLs is made available in coordination with the U.S. Treasury.
“In the case of PREPA, its liquidity will not allow it to continue the recovery work and provision of services in February if the central government does not lend it money,” the governor said.
“This measure will ensure that the recovery services of these public corporations and the provision of services continue while the federal aid is received under the CDL program,” he added.
On the other hand, the governor said his administration has already achieved that the municipalities have access to the loan application process of up to $5 million under the CDL program.
These funds may be withdrawn, according to the needs of the municipalities, for a period of five years. Financial assistance under this program can be used to cover the operational expenses of the municipalities.
The Puerto Rico Federal Affairs Administration in Washington (PRFAA) will act as a facilitator between the municipalities and the federal government.