Toa Baja - Powering up the Palo Seco thermoelectric plant will take four to six months, warned Governor Ricardo Rosselló Nevares yesterday.
Following expectations after the announcement regarding the beginning of General Electric (GE) work to "turn on" the plant, the governor said that the repair will extend for several months, so that -immediately and temporarily- the bet is on the energetic boost provided by two generators brought to Puerto Rico by the US Army Corps of Engineers.
They plan that the machines, which are in a lot of the thermoelectric plant, start operating next Monday, October 23.
"There have been many stories here... This is not ready to be turned on. (Regarding) Palo Seco, we had a report that clearly stated that it could not be powered up, that there was a lot of corrosion and it endangered the public servants of the Puerto Rico Electric Power Authority (PREPA) themselves", said the governor in a brief visit to the power plant.
The study, prepared by New York-based engineering and consulting firm Island Structures Engineering, states that there are structures in the plant that are at "an imminent risk of collapse."
When Palo Seco closed last August, PREPA reported that only unit number 1 was operating and units 2, 3, and 4 were out of service.
"The Palo Seco complex is very large and, outside the impact area... there are gas turbines that are running right now. Now we are going to add 50 to 58 megawatts... to strengthen the electrical system in the metropolitan area," explained PREPA Executive Director, Ricardo Ramos.
However, neither Rosselló Nevares nor Ramos were able to specify how many people will benefit from this temporary measure, which, Ramos recalled, will join the 230,000 volt line that will come from the south to energize the metropolitan area.
Until yesterday, 19% of the customers of the Island had electric power.
Proposals on the table
Controversy about the reactivation of Palo Seco arises when the Puerto Rico Public-Private Partnerships Authority (P3 Authority) evaluates three unsolicited proposals submitted by private companies interested in doing business with PREPA.
One of the proposals -Cube Hydro- seeks to generate hydroelectric power. The proposal of Bostonia Group, according to the government, is aimed at improving the reliability of electricity generation. Meanwhile, Puma Energy would have filed an application for a natural gas generation plant.
Puma told El Nuevo Día, in written statements, that their proposal before the Executive Branch consideration is not the first one it submits. In 2012, Puma participated in a PREPA call for proposals directed to the conversion and supply of Liquefied petroleum gas (LPG) of units 5 and 6 of San Juan. The multinational indicated that, then, the proposal was the winning one, but "internal processes in PREPA made it unsuccessful."
Two years later, according to Puma, PREPA renewed its intention to convert San Juan's units 5 and 6 to natural gas and the process came to nothing. That year, that is to say, in 2014, Puma hired the company World Professional Group, of which Elías Sánchez is a partner. He is the former-director of Rosselló Nevares campaign and, until last June, the governor’s representative before the Board. Puma confirmed the hiring of WPG to El Nuevo Día.
According to Puma, a firm that has invested over $500 million since its came to Puerto Rico about five years ago, the proposal being considered by the P3 Authority would result in savings for the generation of PREPA and in jobs creation. Puma said that with natural gas, the unit could generate up to 100 megawatts of electricity.
The idea of ??a generating plant in the northern area was already in the government plans long before Puerto Rico lost power due to Hurricane Maria.
In April this year, during its convention on public private partnerships, the government proposed that, by 2018, there would be "an alternative fuel facility at Palo Seco."
According to the government document, the new unit has the approval of the Energy Commission of Puerto Rico, as the project is a part of the Integrated Resource Plan of PREPA.
According to the P3 Authority document, in the face of the lack of natural gas in northern Puerto Rico, the unit would initially operate with diesel or propane gas to meet air quality standards, one of the aspects which Palo Seco has breached over the years. The document states that the location of the generation plant would be "in" or "near Palo Seco". The project would be managed "fast track" to start operations in 2021.
Puma told El Nuevo Día that it submitted its proposal to the P3 Authority last August. That same month -on the 25th- the report of Island Structures Engineering that alerted about the structural risk of Palo Seco was submitted and, as a consequence, the plant was closed.
While Puma awaits the evaluation of its proposal -which, according to the government, has just started- the company is already doing business with PREPA.
Puma, a well-known contractor
Between fiscal years 2012 and 2015, according to the Contracts Register of the Comptroller's Office, Puma Energy maintained contracts with PREPA, which amounted up to $1,733 million, approximately, for fuel supply.
By August 2015, PREPA -under the direction of the former restructuring officer, Lisa Donahue of Alix Partners- renegotiated the fuel contracts. Donahue then pointed out that the new contracts, granted to FreePoint Commodities and Natural Gas Procurement, represented better financing terms and savings of around $55 million in the purchase of these raw materials.
Last February, alleging that PREPA needed to get better terms from creditors, the Rosselló Nevares administration terminated the Alix Partners contract, an agreement that the governor strongly criticized during the election campaign and he promised to look for alternatives to eliminate it.
On July 21, Puma received again a fuel contract from PREPA. The contract is valid until July 20, 2019 and is about $ 299.7 million.
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