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On Wednesday, following seven years of overseeing Puerto Rico, Financial Oversight and Management Board Executive Director Robert Mujica remarked that the oversight board intends to be more proactive in facilitating the reconstruction of the island’s electrical grid to enhance system stability, advising that the government must have a feasible alternative if it seeks to eliminate the private firms managing the assets of the Puerto Rico Electric Power Authority (PREPA).
Mujica expressed that although he thinks LUMA Energy and Genera PR, the private operators, are underwhelming in their performance, he attributes the main issue to the sluggish pace of grid repairs, as just $1.3 billion of the $17 billion set aside for energy infrastructure has been utilized.
“If you aim to remove the operator, you must have an alternative ready, and it should be immediate because any transition will require time … and further delays are inevitable,” Mujica warned. “We will need to approve the contract.”
Candidates for governor, including New Progressive Party’s Jennifer González Colón, Popular Democratic Party’s Jesús Manuel Ortiz González, Dignity Project’s Javier Jiménez, and Juan Dalmau Ramírez from the Alliance, have all pledged to terminate the contracts of the private operators due to their inadequate performance.
“We are currently in an election season; candidates often make various claims,” Mujica remarked. “Our priority must be to ensure the system operates effectively, and any further delays are detrimental to the people of Puerto Rico.”
He dismissed the notion of returning to public officials managing PREPA.
“Those who fail to learn from past mistakes are destined to repeat them,” Mujica stated. “Let’s recall how we arrived at our present situation. The previous operator neglected to invest in the system. Political interference was a factor. Those tendencies are recurring. The deeper one goes into a crisis, the more one forgets.”
Mujica cited the power outages as a result of insufficient generation capacity to meet demand and the neglect to address and update the energy infrastructure.
“Our focus is on finding solutions. The board’s role is to regularly gather all parties involved, identify issues, and devise solutions,” he explained. “Few are acknowledging that we have only invested $1.2 billion out of $17 billion.”
Mujica noted that the oversight board had not intervened previously as it does not oversee federal funds, and the island government maintains that federal funding is under its control.
He mentioned that at this stage, the board is keen to speed up the grid repair process and needs to secure funding for PREPA. The utility has around $1.5 billion in its account, but much of that is restricted or set aside in reserve accounts.
“As the investment pace in the system ramps up, you encounter reimbursement challenges,” Mujica stated. “We must fast-track the process, for which we will require additional cash.”
He outlined the plan to assess bank account balances and explore options like reimbursements from the Federal Emergency Management Agency to address the failing grid.
Mujica also mentioned that the oversight board is formulating an economic plan for Puerto Rico, which is currently relying on federal funds that will soon decrease.
“There is $10 billion in federal funds circulating through the economy,” he remarked. “This inflates the economy’s appearance [compared to what it would look like] without federal assistance. It will diminish.”
