Puerto Rico's House of Representatives yesterday approved a bill aimed at overhauling the island's troubled power utility PREPA, pushing the agency a step closer to finalizing a deal with creditors to restructure more than $8 billion debt a day before a key deadline, Reuters reported yesterday. Fixing PREPA's debt is seen as an important step in resolving an overall $70 billion debt load in Puerto Rico, and the utility has struck agreements with creditors on a debt exchange in which bondholders would accept 15 percent cuts to repayments. The creditors' support, though, is premised on passing legislation aimed at stabilizing PREPA's finances and governance. The House passed the bill, known as the PREPA Revitalization Act, yesterday, according to a webcast of the vote, following passage by the Puerto Rican Senate on Wednesday. However, because the House introduced amendments, the bill must return to the Senate for approval before Governor Alejandro Garcia Padilla can sign it into law. Read more.
In related news, questions about the PREPA’s procurement of oil are part of a much larger mandate the Senate has taken on — determining how the authority became mired in more than $9 billion in debt it says it cannot pay, according to a New York Times analysis today. The debt troubles could not be more pressing, as the legislature faces a deadline on Tuesday for a vote on the authority’s plan for renegotiating that debt. While it is clear that the authority’s financial downfall is complex and multifaceted, the question of whether it bought dirty oil while billing customers for clean oil stands out as one of the most charged issues it is facing. If true, the accusations would go beyond errors in judgment and amount to a decades-long fraud. “It was a scheme,” said Abraham Ortiz, a lab director at Puerto Rico’s power authority, “and it went on for years.” Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
