Americas News

Judge approves $300 million loan to sustain power generation in Puerto Rico

US Coast Guard Air Station Borinquen members deliver relief supplies to residents in Utuado, Puerto Rico in the aftermath of Hurricane Maria. Photo: Twitter/USCGSoutheast

A judge on Monday, February 19th approved a $300 million loan issued by the Puerto Rico government to allow the island to continue paying for fuel to generate electricity. A previous $1 billion loan request was denied as the island hadn’t provided justification to warrant a loan of that size.

The federal control board overseeing Puerto Rico’s finances issued a request for a $300 million loan on Thursday, February 15 after the larger $1 billion request was rejected by a federal judge. Puerto Rico Electric Power Authority (PREPA)’s chief financial adviser warned that the utility would need financing in place by the next week, or they might have to start cutting power to some areas.

The US territory warned it might face power rationing outages as a lack of cash hinders operations of the electric power authority. The island’s power system is still recovering after destruction brought by hurricane Maria last September with generators, power lines, and substations still being repaired. A New York judge denied the agency a loan on Thursday, which Ernesto Sgroi, president of the agency’s governing body, says could interrupt continued operation of the power grid and the purchase of fuel required to generate electricity.

PREPA says initial efforts to “ramp down” power generation at some stations “are not expected to interrupt existing electric service but may have an impact on the stability of the grid.” The effort is expected to save around $9 million per month.

The electric agency said Monday that the network was back up to 93.9 percent of its normal electric generation capabilities, and 83.8 percent of customers were again with power after Hurricane Maria struck last September.

The statement, released Friday, follows a decision of denial by federal judge Laura Taylor Swain to grant PREPA a $550 million loan to help with operating costs. The electric agency hoped to take the money from a proposed $1 billion financing package, which would have been loaned by Puerto Rico’s Development Bank.  The judge stated that Puerto Rico can still request a lesser loan up to $300 million, but would need to submit a new request.

Swain told the agency at a hearing on Thursday that they had not shown enough effort to secure third-party financing before asking the government for the loan.

Puerto Rico’s Financial Oversight and Management Board (PROMESA) already authorized a $300 million loan to allow power utility grid operations and to continue paying the workers involved in restoration the system following Irma and Maria.

As of February 15, 79 percent of the island has had power service restored.

If Puerto Rico doesn’t qualify for additional loans needed to continue operations of the power grid, the agency could be forced to furlough workers including the ones working on restoration efforts.  It also warned that without money, they can’t purchase fueling material like diesel to power up the electrical generation systems in the southern port of Guayama.

In a worst-case scenario, Puerto Rico could return back to conditions of last October when nearly the entire island was in the dark if more severe weather to disrupt the power grid.  It would also place many hospitals in serious conditions and patients would be at risk of not receiving needed medical attention. During the months following Hurricane Maria, many died as the result of the chaotic situation without power services to operate medical equipment and no water services.

Maria makes landfall on Puerto Rico as “potentially catastrophic” hurricane


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