The government of Puerto Rico and a federal control board managing the island’s economy clashed on Friday about why the Us territory would exit a protracted and controversial bankruptcy.
These two parties were at war over a debt restructuring arrangement for Puerto Rico’s electricity utility as well as how the island’s transportation authority could generate money.
A preliminary proposal to consolidate or more $9 billion in debt held by the Electric Power Authority, the island’s largest government body, has been met with scepticism by prominent senators, including the president of Puerto Rico’s Senate. The plan, which would reduce the energy company’s debt by more than 30%, must be approved by bondholders. However, legislators and many individuals worry that it would result in even higher rises in electricity costs, despite the fact that outages are still occurring. Due to this lack of support, the board’s chairman, David Skeel, and others met with legislators this week in an attempt to garner the necessary votes.
If legislators reject the proposed arrangement, Skeel and other board members say there may be alternative possibilities, but they’re riskier and more expensive.
“It opens the door for creditors to seek several legal channels… include receivership,” said board member Antonio Medina. Another source of contention between the board and the government of Puerto Rico is a proposed 8.3% annual rise in tolls from fiscal year 2018 to fiscal year 2024 to improve road conditions and enhance revenue for the island’s Highways and Transportation Authority.
According to the commission, only 13% of Puerto Rico’s highways are in good condition, compared to an average of 84 % on the mainland. Toll prices haven’t been adjusted since 2005, according to the report.
The planned increases are “massive,” according to board member John Nixon. “They’ll have an impact on the public, but the inability to put them in place over time is what’s causing such a large increase.”
Gov. Pedro Pierluisi, who was present at the board meeting on Friday, said the planned increase is unnecessary since other sources of income exist. He pointed out that Puerto Rico has one of the highest average tolls per mile of any US territory.
He stated that his government is committed to getting the Highways and Transportation Authority out of bankruptcy before the end of the year, but that he will not take any actions that would negatively impact users.
The agency’s and Puerto Rico’s power company debt restructurings are the only major ones still unresolved approximately 5 years that after territory declared for the region’s largest bankruptcy in US history after revealing it couldn’t pay its more than $70 billion in public debt.