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Fluor Corp.’s work repairing hurricane damage to Puerto Rico’s still-hobbled electrical grid is winding down as its federal funding runs out, the U.S. Army Corps of Engineers said yesterday, WSJ Pro Bankruptcy reported. The Army Corps had tapped Fluor to repair electric lines damaged in Hurricane Maria under an $840 million contract. Now the multinational company, based in Irving, Texas, has told its subcontractors to demobilize as the federal deal reaches its dollar limit and electricity comes back online across parts of Puerto Rico. Fluor’s drawdown comes as power-restoration efforts on the island are far from complete: Roughly 15 percent of customers remain offline five months after Maria struck, according to Puerto Rican government data. Read more. 

In related news, a U.S. House of Representatives subcommittee plans to hold a hearing next week to discuss efforts to restore Puerto Rico’s electrical infrastructure in the wake of last year’s devastating storms, the panel said yesterday. The House Energy and Commerce Committee’s oversight panel chairman, Rep. Gregg Harper (R-Miss.), said that the Feb. 28 hearing would allow lawmakers “the opportunity to closely examine recent efforts to repair Puerto Rico’s damaged electric grid.” Read more. 

A federal judge approved an emergency $300 million loan that will keep Puerto Rico’s troubled electric utility in operation, averting a threat of more power outages at a time when the island is trying to recover from last summer’s devastating hurricanes, the Wall Street Journal reported. Judge Laura Taylor Swain of U.S. District Court in New York yesterday signed off on the loan from the island’s central government. Her decision comes days after she rejected the funding for the utility, known as PREPA, saying the cash-strapped power utility hadn’t looked hard enough for alternative funding before seeking court approval of a loan. PREPA, which had sought approval to tap $550 million of a proposed $1 billion financing package, is in desperate need of funding to maintain restoration work on the island’s power grid and to prevent additional blackouts.

Puerto Rico’s power company will begin shutting down as soon as Friday if it doesn’t receive a $1 billion loan from the territory’s central government, threatening to cause widespread electricity outages across the hurricane-devastated island, a lawyer for Puerto Rico told a U.S. judge, Bloomberg News reported. The injection of cash from the bankrupt government will allow the Puerto Rico Electric Power Authority, called Prepa, to keep running while it waits for President Donald Trump’s administration to release disaster-recovery loans approved by Congress. Without it, the company may be forced to begin rolling outages within weeks, said Joseph Davis, an attorney for Puerto Rico. Damage from Hurricane Maria in September decimated the power grid, leaving some residents without power for months after the storm. The damage has also intensified the financial squeeze on the government-run utility, whose revenue was decreased as customers went without electricity. Governor Ricardo Rossello said yesterday that PREPA is set to run out of cash within three weeks. The loan would prevent a humanitarian crisis, he said, and possibly allow the commonwealth to access the federal loans that have been held up since Trump’s administration said Puerto Rico’s government may have too much cash on hand to warrant the assistance yet. Read more. 

In related news, Puerto Rico Governor Ricardo Rosselló said yesterday that he expects the bankrupt island’s oversight board to certify his revised fiscal plan in “the next couple of days,” Reuters reported. Aimed at putting the U.S. territory on a path to economic recovery, Rosselló’s latest plan, introduced on Tuesday, has already drawn opposition from a large group of creditors. Rosselló said that his ability to address creditors’ broad concerns was limited by the Title III court restructuring process. That court case, or negotiations around it, will ultimately be used to hash out specific debt repayment terms, he said. Following the release of the revised plan, which taps federal money and turns a deficit into a modest surplus, the price on Puerto Rico’s benchmark GO bond is on a third straight day of significant gains on heavy volume. Read more. 

A top Puerto Rico senator is suggesting that the bankrupt island accept its own deeply distressed bonds as collateral - at nearly full-value, no less, Bloomberg News reported. The bill would allow local bondholders, known as bonistas del patio - a group of some 60,000 believed to hold $15 billion in securities - to use as much as 90 percent of the notes’ nominal value to obtain loans to nurture job-creating businesses. Commonwealth Senate President Thomas Rivera Schatz said the legislation is meant to encourage investment by freeing “dead capital.” But it could instead make the storm-ravaged island’s perilous financial situation even less tenable: If the loans sour, the government would acquire securities worth pennies on the dollar for a sizable net loss. “That enormous capital of $15 billion must be reactivated to facilitate local investment, production, job creation, increase exports and reduce imports," Rivera Schatz wrote in the bill.

Puerto Rico Governor Ricardo Rosselló yesterday released a revised fiscal plan that will use $18 billion of additional money from the U.S. federal budget to transform the bankrupt island’s deficit into a $3.4 billion surplus within six years, Reuters reported. The injection of new funding from the federal budget, enacted earlier this month, will let the U.S. territory shift its recovery plan again and make changes requested by its federally appointed financial oversight board. The new blueprint came after Hurricanes Irma and Maria devastated Puerto Rico in September and altered its economic outlook. Before the storms, the recovery plan had projected a nearly $4 billion surplus through 2021. But after the hurricanes, the government forecast a $3.4 billion gap for the same period that would not allow any repayment of the island’s debt. Now, the island’s budgetary health would rise again to a projected $3.4 billion surplus by 2023 under the new estimates, as the destruction is also bringing disaster aid. Altogether, the revised plan incorporates $21 billion of private insurance proceeds and assumes $49.1 billion of disaster aid from the federal government.

Puerto Rico said on Friday that it will receive $16 billion in federal aid under a disaster recovery package signed on Friday by U.S. President Donald Trump, Reuters reported. That money includes nearly $7 billion announced on Wednesday and will help the bankrupt U.S. territory recover from September’s Hurricane Maria, according to a statement on Friday from Governor Ricardo Rosselló and Jenniffer González, Puerto Rico’s nonvoting member of the U.S. Congress. Rosselló said on Wednesday that Puerto Rico would get $4.9 billion to shore up its near-insolvent Medicaid system and another $2 billion or so under the Community Development Block Grant (CDBG) program to repair its destroyed electric grid. On Friday, Rosselló and González said the island would receive a total of $11 billion under CDBG, a program run by the U.S. Department of Housing and Urban Development. The additional portion would be used to help local businesses and repair and build new homes, they said. Read more. 

An explosion and fire in a power facility in Puerto Rico Sunday night knocked out power to a densely populated corridor of the island, which is still getting back on its feet from last summer’s devastating hurricanes, the Wall Street Journal. The outage plunged much of the capital San Juan and surrounding neighborhoods into darkness, and served as a reminder of the island territory’s vulnerability to power interruptions. The explosion caused no injuries, officials said. The cause is under investigation. Outages were expected to last a day or so for most affected. A power plant fire in 2016 left the island’s 3.4 million residents without electricity for days. Six months after hurricanes Irma and Maria, a quarter of the customers of the Puerto Rico Electric Power Authority remain without power. Read more. (Subscription required.) 

Struggling retailer Toys “R” Us Inc. is seeking bankruptcy court approval to close two stores badly damaged by Hurricane Maria in Puerto Rico, after reaching settlements with landlords of the properties, while repairing three other locations, WSJ Pro Bankruptcy reported. Toys “R” Us has been assessing the damage done to its five stores in Puerto Rico, which were affected by the hurricane shortly after the company sought chapter 11 protection in mid-September. The retailer decided to repair and continue operating three of its stores, and would reject the unexpired leases for two of the stores that would see the costs outweigh the value of repairs, according to court papers filed on Thursday. Toys “R” Us estimated that it would collectively cost about $4.3 million to repair both of the locations, which would take an estimated year for both of the stores.

A $90 billion disaster aid package agreed on by U.S. lawmakers on Wednesday would include nearly $7 billion in aid to storm-battered Puerto Rico and the U.S. Virgin Islands, according to two Senate Democratic aides and Puerto Rico’s governor, Reuters reported. The deal, likely to be voted on in Congress this week, would send $6.8 billion to the two U.S. territories devastated by Hurricanes Irma and Maria in September, said the aides. Puerto Rico Governor Ricardo Rosselló issued a statement saying his island would receive about $4.8 billion to shore up its Medicaid program for the poor, which is close to running out of money. Another $2 billion in Community Development Block Grant (CDBG) funding would pay for repairs to decimated power grids in Puerto Rico and the Virgin Islands, the governor said. The disaster funds announced yesterday would provide just a fraction of the $94.4 billion Rosselló has said the island needs to recover from cataclysmic damage to its infrastructure and housing stock. Congress could appropriate more money later. Read more. 

In related news, the U.S. agency responsible for disaster response hired a contractor that failed to deliver millions of emergency meals in hurricane-ravaged Puerto Rico last year, U.S. Democratic lawmakers said on Tuesday, Reuters reported. Democrats on the House Oversight Committee cited records that showed the Federal Emergency Management Agency (FEMA) awarded a nearly $156 million contract to a one-person company that delivered just 50,000 of the expected 30 million meals. The lawmakers said that documents showed the company, Atlanta-based Tribute Contracting, had a history of problems handling smaller government contracts worth less than $100,000 and had been barred from government work until 2019. Representatives for Tribute and its owner, Tiffany Brown, did not respond to requests for comment. Read more. 

The concentration of illegal housing in Puerto Rico presents a vexing dilemma for local and federal authorities already overwhelmed by the task of rebuilding an economically depressed island after its worst natural disaster in nine decades, according to a Reuters analysis. Puerto Rico Governor Ricardo Rosselló has stressed the need to “build back better,” a sentiment echoed by U.S. disaster relief and housing officials. But rebuilding to modern standards or relocating squatters to new homes would take an investment far beyond reimbursing residents for lost property value. It’s an outlay Puerto Rico’s government says that it can’t afford, and which U.S. officials say is beyond the scope of their funding and mission. “It’s definitely a housing crisis,” said Fernando Gil, Puerto Rico’s housing secretary. “It was already out there before, and the hurricane exacerbates it.” In Puerto Rico, housing is by far the largest category of storm destruction, estimated by the island government at about $37 billion, with only a small portion covered by insurance. That’s more than twice the government’s estimate for catastrophic electric grid damage, which was made far worse by the shoddy state of utility infrastructure before the storm.