The Puerto Rican government received three private sector initiatives - presented through unsolicited proposals - to deal with three of the great challenges of the island´s energy system: stability, diversification and optimization of alternative mechanisms such as hydroelectric generation.
After the almost-mortal blow of Hurricane Maria to the transmission and distribution network of the Puerto Rico Electric Power Authority (PREPA) and in parallel to its repair, the government proposes to route public-private partnerships (PPPs) through three proposals submitted by Cube Hydro, Bostonian Group and Puma, Governor Ricardo Rossello said yesterday.
"With this effort, we seek to improve services and that we can have savings for the people of Puerto Rico," said the chief executive.
The executive director of the Public-Private Partnerships Authority, Omar Marrero, said that the expectation is that for the second quarter of 2018 transactions are ready to make these PPPs a reality.
PPPs are one of the main goals of the current administration to boost economic development. In fact, the government amended the 2009 PPP Act to allow not only the state to approach private companies to delegate services, but the private sector can also submit to the government what is known as an "unsolicited proposal." Because of this change, the Rosselló administration names these agreements as participative public private partnerships.
Marrero said he could not give details of the three PPPs for unsolicited proposals. However, he explained that Cube Hydro's proposal is to produce energy "at a lower cost" with the hydroelectric facilities owned by the Aqueduct and Sewer Authority. "That optimizes hydroelectric production and is clean energy. The ownership of the hydroelectric plants is not to be transferred, "he said.
The energy stability project proposed by the Bostonian Group is for the generation of energy and "to manage more efficiently the charge relief of the system, which does not respond right now." At the moment, PREPA faces problems since the bulk of the energy demand is in the northern area, but the generation is mostly in the south of the island, one of the most affected by the hurricane. When trying to energize the north, there is no back up in generation and power goes out continuously.
The third unsolicited PPP, from Puma, seeks to diversify the PREPA network with a liquefied gas generation plant.
The three unsolicited projects join three other government-run projects that have priority, Rossello told at press conference with Marrero. Among them, the concession of the maritime transport system, both the route from Cataño to San Juan and the routes from Fajardo to the island municipalities, which contemplates a possible new route 31% shorter from Roosevelt Roads to Vieques. In addition, a project is evaluated for the construction, operation and maintenance of 500 homes for university students in Mayagüez and the modernization of government parking lots. These PPPs are included in the fiscal plan submitted by the Rosselló administration and approved by the Board.
"Being conservative, what this represents for Puerto Rico is potentially 7,000 jobs in the construction process and between $ 300 to $ 400 million through that construction and income of up to $ 50 million a year for the government, either by tax measures or by the increase in income expected, "said Rossello.
The three PPPs that the government channeled are in the feasibility study stage.
In the case of PPPs for unsolicited proposals, each feasibility study should be done by the proponent company, Marrero said.
"Now the unsolicited proposals were accepted, determined to be favorable to the public interest and move to more extensive evaluation. They are evaluated in detail to determine that they are viable and open the process to additional alternatives that can reach the same point and that is where the competitive process begins, "he explained.
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