Business

Puerto Rico pushes to privatise operation of public services

Friday, April 21, 2017    

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SAN JUAN, Puerto Rico (AP) — Puerto Rico is ready to sign dozens of new deals to privatise the operation of public services as government funds dwindle amid an economic recession, the island’s governor told some 800 investors attending a two-day financial summit yesterday.

Governor Ricardo Rossello said public-private partnerships could create up to 100,000 new jobs and generate some Us$5 billion for a US territory mired in a decade-long economic crisis and facing a US$70 billion public debt load that it is struggling to restructure.

“We are not leaving things to chance,” he said, noting that Puerto Rico has no access to capital markets. “We are building a government that recognises we can’t do everything.”

Most public-private partnerships on the US mainland involve transportation projects, but officials said the scope would be much wider in Puerto Rico and that the projects would not require legislative approval.


The government hopes to privatise services including the operation and maintenance of several highways and the unreliable ferry service from Puerto Rico to the popular islands of Culebra and Vieques.

Other projects would target waste management, student housing, parking and recreation facilities, information technology, renewable energy and natural gas projects.

“We’ve been so aggressive about this because we have no other option,” said Omar Marrero, executive director of the Authority of Public-Private Partnerships. “Either we swim together, or we sink together.”

Government officials have pledged that 25 per cent of revenues from those deals will go to the island’s crumbling public pension system that is underfunded by US$40 billion and expected to run out of money this year.

Officials have identified at least 30 projects that would benefit from being run by a private company and said they would guarantee badly needed maintenance and upgrades the government cannot afford. Puerto Rico can no longer keep financing the bulk of the island’s development, said Elias Sanchez, the government’s representative to a federal control board overseeing the island’s finances.

“It’s just not viable,” he said. “Our fiscal situation is so challenging that there’s no way the government can be the lead in investments or projects ... That can only be led by the private sector.”

It’s been roughly four years since Puerto Rico last signed a deal to privatise the operation of public services without complete privatisation. The previous governor signed a deal to privatise operations at Puerto Rico’s main international airport and its busiest highway, a move that allowed a previous administration to eliminate 60 per cent of the Ports Authority’s debt and pay US$1 billion worth of highway debt.

Government officials sought to ease any concerns about Puerto Rico’s economic crisis by noting that the federal control board has to approve any projects, and that a financial package approved by US Congress last year allows the government to award expedited permits to projects considered critical to the economy.

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