The executive director of the Public Private Partnerships Authority (P3A), Omar Marrero said that the government received an unsolicited proposal to create a Public Private Partnership (P3) on the route from Caguas to San Juan of the Metropolitan Bus Authority (AMA, Spanish acronym).
"We received another unsolicited proposal that we are evaluating for the land transportation system. It would be part of the AMA system. We are in the initial stage. It would be to grant some sections or routes of AMA with a view to granting some more", explained Marrero."It is a section with high levels of traffic congestion and we believe that it can be a much more efficient and reasonable solution than the train (which has already been proposed), and it is much more cost-effective," the official added in an interview with El Nuevo Dia.
This unsolicited proposal, whose proponent was not revealed, joins another 20 projects that the government has received so far, as stated in the revised fiscal plan submitted to the Oversight Board.
Marrero explained that, out of those twenty projects, only six are under consideration, while the others were either ruled out or have not passed to the next stage.
The mayor of Caguas, William Miranda Torres lamented this P3 proposal for the AMA route because if approved it would mean ruling out the plans to establish a light rail on the route from his town to the capital.
Miranda Torres stressed that the train initiative would not only benefit the people of Caguas, but also other 11 municipalities.
"The train would have an impact on the whole region. I think they should consider this carefully", said Miranda Torres, not without recognizing that the financing of the train is a challenge since its development costs were estimated at $ 600 million.
He said that the train could be financed with federal funds, but that it could require state matching funds.
When asked if a P3 in an AMA route would solve the congestion issue from Caguas and towns nearby to San Juan, the mayor said: "Looking ahead, you must look for infrastructure projects that have that vision of future. I don´t think people would like to see more cement down there," he said.
P3 are one of the main resources of the current administration to boost economic development, and in fact, with the first bill Governor Ricardo Rosselló signed into law (Law 1 of 2017), the Public Private Partnerships Act 2009 was amended and called them Participatory Public Private Partnerships.
Changes to the statute allow not only the government to approach private companies to provide services, but the offer may be the other way round, which is known, according to the regulations of the P3, as "unsolicited proposal." In addition to private companies, these initiatives can include universities and non-profit organizations.
The government estimates that the economic impact of P3s will be $ 5 billion over a 10-year term.
Marrero did not provide a figure of the government´s investment to direct the P3s so far.
He said that "optimizing the mechanism of unsolicited proposals will become more important now more than ever" because the island, plunged into a fiscal crisis, is trying to recover with the injection of billions in federal funds.
"The fiscal plan included the fact that, now more than ever, we have to find ways to streamline investment in infrastructure and the best way to do it - as has happened in other jurisdictions - is through unsolicited proposals", he said.
Six proposals
At the moment, six unsolicited proposals are taking shape, as well as three that came up at the request of the government. But of those six, four are related to power projects, and are paralyzed after the announcement of governor Rosselló that he will privatize the Electric Power Authority (PREPA).
These are proposals to create microgrids to stabilize the power grid, diversify and optimize alternative mechanisms such as hydroelectric generation. The unsolicited proposals were submitted by Tesla, Puma Energy, Bostonian Group and Cube Hydro.
These proposals await the revision of the Integrated Resource Plan, Marrero said.
However, unsolicited proposals not linked to the energy issue are still underway. There is the proposal of the Ana G. Méndez University System to professionalize the education of all the employees at the Department of Public Safety and those of the The Department of Correction and Rehabilitation. Rosselló has assured that, with this project, the Police Academy in Gurabo will not disappear.
Another unsolicited proposal came from the Global Ports Holding Company for the management, financing and development of the six tourist ports of San Juan.
The advanced ones
Out of all the P3s that the government wants to develop, there are three classified as "priority" and are the most advanced, Marrero said.
Among them is the proposed concession or sale of government parking lots. These are 60,000 spaces, some multi-storey and others under the "self-parking" category.
"The project we are considering is the concession of the first package. A package of nine parking lots including that of the Conservatory of Music in Minillas, the Fine Arts College, the Industrial Development Company (PRIDCO), the Justice Department, the Department of Labor, Housing, Solid Waste and AMA. The aim is to grant them and we are finalizing the study of economic feasibility to determine if it is a project that we want to continue working on. Everything depends on that study”, said Marrero.
Another P3 is the student housing project at the Mayagüez Campus of the University of Puerto Rico.
"We are seeking to optimize student life at the Mayagüez Campus, providing better parking facilities, a students center and housing. It involves different components. We are structuring it as Mayagüez wants to have the experience - and wants to request first and second year students - to live on campus. It's the transformation of the university campus", he said.
He pointed out that the cost of housing will be one "that students can afford".
"The private entity (proponent) cannot consider rent as their only income", he added.
The government is also looking for a private entity to be in charge of maritime transportation between Cataño and San Juan and Fajardo to Vieques and Culebra. The project they are evaluating for the ferry between Fajardo and the municipalities contemplates adding a route shorter than the current one, but at a higher rate.
However, Marrero said that the cost for residents of Vieques and Culebra will remain low.
"About four to five companies have shown interest (in this P3)", he said.
In addition, he said that companies expressed concerns about how much the subsidy for this transportation would be, considering that at the moment, the operation of the Maritime Transport Authority (PRMTA) costs about $ 45 million and, $ 40 million come from government subsidies.
"Obviously, we want to reduce the subsidy as we improve the quality of the service", he said.
The government expects to grant these three P3s before the end of the year. "These three projects will have their feasibility study ready, which is being carried out this quarter. We expect the study to be completed by the end of February or the end of March. The results will be made public for 30 days. Once this comment period ends, after the study is made public, the bidding process begins with the final RFQ (request to qualify)", he explained.
Last October, the government had already asked the market for a draft petition to qualify prior to the feasibility study.
"We wanted to go to the market to know its preferences. It was an additional step we took to avoid entering into a bidding process to be declared void in the end, "Marrero said.
Following the approval of Law 1 in 2017, the government contemplated other P3s. One was for the automation of traffic fines collections; another one was to replace water meters with electronic equipment and another one to concession regional airports and highways.
According to Marrero, the projects linked to the Highway and Transportation Authority (PRHTA) are awaiting for the solution of its debt restructuring, through Title III of the federal PROMESA law.
Airports for sale
However, the sale of the regional airports of Patillas, Santa Isabel and Fajardo is still under way. "Some were interested, but the offers are still low and the sale has to be done by appraisal. We have to sell them. We are going to look for ways to sell them at fair market value, "said Marrero.
The offers received so far are low compared to the valuation, said Marrero. The airport of Patillas was valued at $ 130,000, Santa Isabel at $ 860,000 and Fajardo, $ 1.4 million.
The other regional airports are not going to be sold, but "concessions are being considered, particularly for Aguadilla and Ponce, who can receive nine or more passengers commercial airplanes," Marrero said.
References for P3s - especially if airports and roads are involved - are the alliances that Luis Fortuño has already done with Metropistas to manage the PR-22 and PR-5 highways and with the company Aerostar Airport Holdings for Luis Muñoz Marín International Airport.
In particular, the concession to Metropistas has been publicly questioned for continuous tolls increase.
How will the government avoid contracts that benefit only one party?, asked El Nuevo Dia.
"We are going to ensure that the contracts are in the best interest of the people of Puerto Rico. Our responsibility rests on ensuring that this contract has the best clauses. Besides, ownership is relinquished", Marrero answered.
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