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13 September, 2017

Hurricane Irma unleashes the forces of privatization in Puerto Rico

Vultures circling the wreckage of Puerto Rico in the wake of Hurricane Irma are closing in on a long-sought prize: the privatizing of the island’s electric utility.

Puerto Rico avoided the very worst of the storm, which darted just north of the U.S. territory. But it didn’t escape unscathed. Following a request from Gov. Ricardo A. Rosselló, the White House declared a state of emergency. Three people were killed and more than 1 million were left without electricity in the storm’s wake.

The fragile body responsible for that power is the Puerto Rico Electric Power Authority, whose executive leadership warned ahead of the storm that parts of the island could be left without electricity for up to six months.

Thanks to the change in the storm’s path and a crew of dedicated line workers, Prepa, the island’s sole electricity provider, now expects most towns to have their lights back on within two weeks and full power within a month. As of Monday, more than 70 percent of homes had already gotten electricity back.

But once the lights are turned on, Puerto Rican households will face a new threat.

[The investors] have the best sales pitch now,” Carlos Gallisá, a former consumer representative on Prepa’s board of directors, told The Intercept by phone from San Juan. “They have already started, saying that only privatization will serve the people.

For struggling governments around the world, privatizing utilities has come to be seen as a kind of get-rich-quick scheme, offering an upfront infusion of cash to underfunded municipalities. Given Prepa’s size and that of its debt — $9 billion — it has been a long-standing target for privatizers, even before Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act last year to help rein in Puerto Rico’s mounting debt crisis.

The blackout following Irma just added fuel to the fire. Days before Irma hit, Rosselló emphasized that privatization is firmly on the table, telling the New York Times that Irma “can become an opportunity or another liability.” According to a Friday report from Reorg Research, a trade publication for investors, creditors and members of Puerto Rico’s federally appointed financial oversight board have met with Prepa top brass in recent days to discuss a new “transformation plan” aimed at privatizing major aspects of the power authority. The two anonymous sources for the story claimed that the plan could go so far as “breaking up” Prepa entirely, selling pieces of the utility to various bidders.

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