The Puerto Rico legislature is considering amendments to a planned oil tax bond to make it more attractive to investors.
For several months Puerto Rico's government has been working on increasing oil taxes to support a bond of up to $2.95 billion. The Puerto Rico Infrastructure Finance Authority is expected to sell the bond in the next few weeks, with most of the proceeds going to pay off the debt of the Puerto Rico Highways and Transportation Authority to the Government Development Bank of Puerto Rico.
On Thursday morning the Puerto Rico Senate passed the latest amendments to the proposal, according to a staff member in Gov. Alejandro García Padilla's office. The Puerto Rico House of Representatives is expected to consider the amendments on Thursday afternoon.
The amendments would add a consumption-based adjustment to the tax on imported oil. If the island's consumption of oil fell below a certain level in the coming years, there would be an automatic increase in the per barrel tax rate. On the other hand, if island consumption was above a certain level, there would be an automatic decrease in the per-barrel tax rate.
This would help assure that there would always be enough money to pay the bond's debt service.
The amendments also firmly tie the revenues from the oil tax to paying off the bond.
Gov. García Padilla supports the amendments, according to the source close to the governor.
The Puerto Rico Senate first passed amendments to the oil tax and bond bill on Feb. 9. The proposal then went to the House, where additional changes were made. The Senate rejected this version. A conference of the two bodies met and created a compromise version.
