The development of community potable water and sewage projects is at risk, because the $188 million that would defray their cost are not available at the Government Development Bank (GDB) for disbursement.
So revealed an audit by the Inspector General’s Office of the Environmental Protection Agency (EPA), which report was made public yesterday and attributes the situation to the financial condition and scarce liquidity of the GDB.
It’s about, specifically, the so-called revolving funds of the EPA, which are granted as loans –or matching funds– at a very low interest. Deposits are made in the GDB, but the money is managed by the Environmental Quality Board (JCA, by its Spanish acronym) the Department of Health through the Clean Water State Revolving Fund and the Potable Water State Revolving Fund, respectively. According to the audit report, the $188 million are not available because the GDB has no assets –cash– to honor the balance. This in turn, is in response, to the Government’s fiscal and economic crisis.
The balance of the revolving funds in the GDB would have increased to $194.5 million due to reimbursements, transfers and interests earned, the report adds.
By being a service providing utility, the Aqueduct and Sewer Authority (AAA) is the biggest beneficiary of loans from the revolving funds. But, because of its fiscal crisis, the audit concluded that the remaining $580 million are at risk of being defaulted on in –at least– two or three years, or maybe more.
As a result, over $774 million in revolving funds may not be available during an “extended period.” Without access to this money, the funds managed by the JCA and Health, can’t plan for projects or satisfy the needs of the population.
Confronted with the data, the president of the GDB, Christian Sobrino, said yesterday that the institution is waiting to have its fiscal plan certified by the Oversight Board, which is why he’d wait to elaborate on this and other related issues. He highlighted, however, that the audit detected no improper use of funds by any of the agencies in charge of managing revolving funds.
Sobrino added that the JCA has been in “constant communication” with the EPA about this matter since this administration came to office.
For his part, planner Félix Aponte, consumer advocate in the AAS Governing Board, said that revolving funds “are an important source of funding” for low-scale potable water and sewage projects.
He warned, therefore, that its unavailability poses a problem, which could jeopardize both the quality and continuity of the service.
“Those are the cheapest funds which we can access for capital improvements. We would in no way want to loose them, because they are earmarked for water projects. We are not talking about extremely large projects, but they are important because they solve specific problems. They solve small problems that, when let to accumulate, become bigger ones,” said Aponte.
Engineer Juan Antonio González Moscoso, said as much when highlighting that revolving funds are also important in funding municipalities.
Municipalities, he said, tend to use this money for runoff-pollution reduction projects which can lead, in turn, to reducing the risk of floods.
“These are projects that are perhaps not a high priority but which, if lost, in the long run they will result in higher costs for the AAA, which would have to invest more energy and chemicals to treat the water,” said González Moscoso, who also holds a master’s degree in water governance and infrastructure.
The audit report includes recommendations for executives at EPA’s Region 2, to which Puerto Rico belongs, to “restore the viability” of revolving funds and implement strategies that are “more suitable” to the needs.
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