The decision by Puerto Rico Governor Ricardo Rosselló to privatize PREPA comes as the island's electric system is yet to recover from the Hurricane Maria that occurred in September last year.
The Governor said that the island's generation system is 28 years older than the average in the electric power industry in the US.
Privatization of PREPA is expected to help in transforming the generation system into a modern, efficient, and less expensive one.
Rossello said in a statement: “The Puerto Rico Electric Power Authority has become a heavy burden on our people, who are now hostage to its poor service and high cost.
“What we know today as the Puerto Rico Electric Power Authority does not work and cannot continue to operate like this.”
The sale of the US territory’s troubled power utility will take about 18 months to complete and includes three phases.
First phase comprises defining the legal framework through legislation followed by second phase which includes evaluating bids.
In the third phase, the government will negotiate the terms of awarding and hire the selected companies for the transformation and modernization of energy system.
Proceeds from the sale of assets and contracts is planned to be used to capitalize the retirement funds of employees, Rossello noted.
Commenting on the move, PREPA Bondholder Group said in a statement: “We believe the only path for any proposal to deliver low cost and reliable power will be if it respects property rights, since failure to do so will result in years of litigation from multiple parties.
“The sole way to achieve this is to break the pattern of continued disregard for the law and past obligations and reach a consensus resolution with assorted stakeholders.”
Rossello said that the move will help in making new energy system and will also help in meeting its goal of producing more than 30% of power from renewable sources.
“This change will allow us to promote as never before the economic development of Puerto Rico, benefiting the small and medium-sized businesses, with an efficient, reliable, and modern electric power system.”
Image: Puerto Rico Governor Ricardo Rossello. Photo: courtesy of Spigen05/Wikipedia.
