The agreement, with the final approval of all the parties, including the Oversight Board, will provide Puerto Rico with the first tool to gain the confidence it needs to return to the bond market, and to the Authority a path to success. With the deal pretty much underway, there is hope of transforming the corporation into the axis of the country’s development.
No longer can Puerto Rico drag on the wariness that has characterized the negotiation over the future of the PREPA, and which has reflected on the investment climate resulting from the lack of trust on the electric system and the high cost of the service, both dissuaders of corporate investment.
The Oversight Board, at one point, suggested that to achieve the restructure of PREPA’s obligation, the relief in Tittle III of the PROMESA law might have to be invoked, something that loomed less than propitious to the interests of the corporation which already had an agreement with the previous government Administration.
The announcement by the Government that PREPA creditors extended the Restructuring Support Agreement until April 13, thanks to which important aspects of the new proposal may yet be refined, means that there is also more time to explain to the Country what this progress is that has been achieved but, most important, how and when the consumer will be affected, and for how long.
To the common citizen, who’s been held hostage to the poor administration and the swings in the price of oil, the fact that the situation may normalize, in that which regards the debt, is a synonym of a PREPA that is capable of dealing with the problem of blackouts and the expensive bills.
The enormous economic investment made, as well as the effort and time taken to hammer out a path to stabilize the financial picture of the Authority, now merit the highest government transparency, represented in the Fiscal Agency and Financial Advisory Authority (FAFAA), who has been in charge of the recent negotiation.
Preliminary data indicate that there’s been an improvement in the “transition charge” for customers from US$0.0318 cents per kilowatt-hour, approved by the Puerto Rico Energy Commission, to US$0.0198 cents. Inasmuch as this entails an increase in the rate, governor Ricardo Roselló assures that, thanks to the terms of the new agreement, customers will see substantial savings. It is precisely what is needed to soften the impact that the crisis can generate in many homes.
Some economists think the new terms do nothing more than delay the blow, and that starting in 2023 we would have to assume in all of its magnitude. However, in five year’s time the economy could be taking off, there’d be more jobs, and through it a lesser impact from the anticipated blow. Likewise, we would hope that by then Puerto Rico has renewable energy projects that might make the country less dependent on fossil fuels.
We are convinced that it is time to give a true green light to the PREPA revitalization project, one which has robbed the country of so much time and energies, and to embrace the concept of a modern, underground system, that is strong against the onslaughts of the weather, and safe for workers.