November 30, 2020

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The Board approves the fiscal plan for AAA, AEE and Roads

Washington – The Fiscal Oversight Board (JSF) that controls the public finances of Puerto Rico foresees an infrastructure investment plan for the fiscal year that begins on Wednesday that totals $ 1,060 million in the areas of electrical energy, potable water supply, transport and roads.

The amount of the investment projects was highlighted when the ratification of the fiscal plans for the authorities of Aqueducts and Sewers (AAA), Energía Eléctrica was announced. (PREPA) and Transportation and Highways (ACT).

The adoption of the fiscal plans was announced by the JSF just as the AAA consumers who receive water from Lake Carraízo enter into a 24-hour water rationing process every two days, due to its low level.

And they will be launched at a time when the executive director of the JSF, Natalie Jaresko – contrary to what the Federal Agency for the Management of Emergencies (FEMA) – sees near an agreement with FEMA on major reconstruction projects on the Island under section 428 of the Stafford Act, following Hurricane Maria.

The plans contain the infrastructure initiatives that the The government of Puerto Rico must promote under the AAA ($ 349 million), the Highway and Transportation Authority ($ 496 million) and the Electric Power Authority ($ 215 million), according to the JSF.

According to the JSF , the AAA's fiscal plan requires the implementation of 11 fiscal measures, which include a new moderate increase in rates (this fiscal year that ends tomorrow was 2.5%) and "reductions in wasteful use of water and the use of chemicals." [19659003] It will be the third consecutive year with an increase in the water rate from July 1. Increases have been anticipated through fiscal year 2023.

At a roundtable, the JSF today indicated that the AAA's fiscal plan includes placing water meters on production facilities to measure exactly how much Water is lost before reaching the consumer.

Estimates are that about 58% of water is currently lost before reaching residences, businesses, and government offices. According to Jaresko, previously the percentage reached 70%.

Alejandro Figueroa, director of Infrastructure at the JSF, indicated that the AAA has in its capital investment plan for the dredging of water reserves, such as Lake Carraízo. But, the funds to be invested will depend on talks with FEMA.

“Due to its financial problems, AAA had to suspend its capital investment programs. They were not investing at the level that the system requires, "said Figueroa.

Between this fiscal year and 2025, AAA must increase its turnover by about $ 908 million, as well as obtain $ 421 million through two loans to the federal government, according to the certified fiscal plan for the public corporation.

According to the AAA plan, without aggressive reforms, the public company will have a structural deficit of $ 1.7 billion for fiscal year 2025. [19659003] After the agreement with the LUMA consortium for the administration of the Electric Power Authority (PREPA) network and confident that the transformation process of electricity generation is underway, the JSF hopes that the government of Puerto Rico and FEMA agree before the end of the summer on reconstruction projects under section 428 of the Stafford Act.

The main project that would fall under that section would be the transformation of PREPA, the cost of which can reach ha sta $ 18 billion. "We are very confident that an agreement will be reached around 428 by the end of the summer," Jaresko said, repeating a forecast he made two weeks ago before the Natural Resources Committee of the federal Lower House. [19659010] Once the agreement under 428 is reached for FEMA to finance the permanent works projects, the process to rebuild PREPA's electrical network should be put into effect "soon after," Jaresko said.

The JSF, however, he still has to approve PREPA's public-private alliance with Luma, although he participated in the drafting process of the agreement.

Contrary to Jaresko, the head of FEMA in Puerto Rico, Alex Amparo, and the director of the Office for Recovery , Reconstruccion y Resiliencia (COR 3), Ottmar Chávez, have indicated that negotiations on major projects under 428 may last until the end of the year.

Anyway, the process aimed at rebuilding the electricity grid may take 10 to 1 5 years. "We believe we should have emerged from bankruptcy before that," Jaresko said.

A road board

On the other hand, the JSF indicated that it has designed a digital board to keep the public informed about road improvement projects. The board will indicate where the project is being carried out, the status it is in, its cost and who the contractor is.

Jaresko maintained that only 4% of the roads in Puerto Rico "are in good condition ”Compared to 61% in the United States. He also highlighted the very low number of passengers that the Urban Train has.

The JSF plans to approve the budget for the fiscal year 2020-2021 tomorrow. Without an agreement in the Legislature, the fiscal entity would re-approve its document. In any case, under the Promesa law, you always have the last word.

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