$300 Million Loan Headed To Puerto Rico

PUBLISHED: 10:54 PM 20 Feb 2018

Federal Judge Approves $300 Million Loan To Puerto Rico Utility Company

Originally the company was asking for $550 million.

Judge Laura Taylor Swain signed off on a $300 million emergency loan to keep the lights on for those lucky enough to have electricity.

Clinton appointee Judge Laura Taylor Swain signed off on a $300 million emergency loan on Monday. It keeps the lights on for those residents of Puerto Rico lucky enough to have electricity.

In May of last year, the federal oversight board assigned to manage the island’s finances placed the central government into the equivalent of bankruptcy. The mismanaged power company, PREPA, soon followed two months later.

The U.S. Territory was struggling under a $73 billion load of debt, resulting from “decade of economic stagnation” under Obama’s mismanagement.

Vulture-like creditors were fighting to recover every dime they could squeeze from the dwindling pile of funds.

Then Hurricane Maria hit.

Last September, the island was virtually wiped out. Hundreds of thousands are still without power. Customers aren’t paying for something they aren’t getting so the utility provider’s cash reserves are gone. Bills for construction and repairs keep collecting.

Monday’s federal ruling will allow Puerto Rico Electric Power Authority to head off more outages now. The residents are a long way from recovery after last summer’s hurricane.

Judge Swain was reluctant to part with the dough. She rejected the proposal last week. The utility “hadn’t looked hard enough for alternative funding,” she wrote, before going to court for the money.

PREPA was originally hoping for a $550 million dollar chunk of the $1 billion “financing package” that is still in negotiations. They have a “desperate need of funding” to keep the work going.

In court last week, the power company’s top accountant testified that “the government-run utility must have additional financing in place by later this week or parts of the island would begin to go dark within a matter of days.”

PREPA Bondholders weren’t happy. A group of them opposed the deal for a government-backed loan in favor of a $534 million private loan, which they claimed, “wouldn’t disadvantage other lenders.”

There is a plan currently on the table to clean up the utility’s management by “privatizing it.” The approach has the backing of Governor Ricardo Rosselló who feels it would “cut costs while attracting private partners to invest in upgrading its assets.”

As of mid-January, 13.6 million inhabitants were still without power. Poles and lines were blown free from one end of the island to the other.

The U.S. Army Corps of Engineers were sent in to help put everything back together after the storm. As needed repairs went undone due to lack of specialized equipment and parts, the Corps was outraged to find a hidden stockpile.

Technicians stumbled onto a PREPA owned warehouse full of “transformers, splices, and other materials.”

Corps Spokesperson Lynn Rose reported, “the items are critical to the ongoing mission to restore power to Puerto Rico,” yet they were left lying dormant.

They showed up again with armed security forces and seized the equipment, putting it immediately into use.

“Leadership responsible for restoring the Puerto Rico power grid and their security detail toured the warehouse in cooperation with PREPA. USACE conducted a full inventory and immediately sent out critical materials to contractors at work sites.”

Engineers were especially happy to find some uniquely specialized supplies, “including hard-to-find full-tension steel sleeves, critical to rebuilding.” Several hundred are now in use.

According to one of the security contractors assigned to watching the backs of the power crews, the workers are frustrated by lack of supplies.

“Crews of linemen brought down from the U.S. were frustrated about the lack of rebuilding materials, which made it virtually impossible for them to fix downed infrastructure.”

He told about one crew who “just sat in the truck and watched a movie” because they had nothing to do that day.

“They had a bunch of poles but no lines, or any of the stuff that goes on the poles. They were just setting bare poles, getting as far as they could go. We were in a town for two weeks and barely got anything done because they didn’t have the supplies.”

Puerto Rico’s Senate minority leader was livid. Senator Eduardo Bhatia wants charges filed. “The news that has come out today about the discovery made by armed federal agents of thousands of electrical spare parts hidden in a PREPA warehouse borders on a criminal act by its managers.”

“It is time for people to stand up and demand answers,” Bhatia insists.

“Hundreds of thousands of families have been in the dark for more than 125 days, people keep dying, and businesses continue to close due to the lack of energy while the necessary spare parts were in the possession of PREPA.”

“Lying about not having the parts to cover the inefficiency of PREPA is outrageous and those responsible must be taken before state and federal authorities to be criminally processed immediately.”