Puerto Rico’s Power Authority Effectively Files for Bankruptcy
The government said the move to, in effect, file for bankruptcy was the only way to reduce the existing debt of the Puerto Rico Electric Power Authority
“to a sustainable level.” The utility, known as Prepa, had previously negotiated an out-of-court deal to reduce its bond payments by about 15 percent.
By MARY WILLIAMS WALSHJULY 2, 2017
Puerto Rico’s troubled power company defaulted on a deal to restructure roughly $9 billion in bond debt
and sought court protection from its creditors, the government said on Sunday.
Bill Fallon, the chief executive of National Public Finance Guarantee Corporation, a bond insurer, called the move “improper” and warned
that it “would leave Prepa years away from attracting the private investment necessary to modernize.”
Electrical power has long been a drag on the island’s economy.
In addition, there are longstanding accusations that Prepa’s fuel-purchasing office for many years bought dirty oil sludge as
fuel, charged consumers the much higher price of cleaner distillates, and then created a slush fund with the difference.
