WASHINGTON – Federal officials are temporarily delaying a federal Community Disaster Loan to the Commonwealth of Puerto Rico while giving the go ahead for the territory's two major utilities to apply immediately.
The Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico Aqueduct and Sewer Authority (PRASA) have “an imminent need for liquidity” this month, said the letter from Gary Grippo, deputy assistant secretary for public finance at the Treasury Department and Alex Amparo, assistant administrator of the recovery directorate at the Federal Emergency Management Agency.
Nearly 40% of Puerto Rico’s power customers remain in the dark, according to the Associated Press.
Puerto Rico Gov. Ricardo Rossello announced Wednesday that he’s prohibiting PREPA from charging customers for power produced by private generators after receiving complaints from residents about getting billed for it.
The territory’s 78 municipalities also can apply directly for the federal CDL money to pay for their operating expenses, according to the letter, which said local governments are eligible to apply for a streamlined CDL for up to 25% of their annual operating budget.
News of the Jan. 9 letter was reported Wednesday by the Associated Press and the Inter News Service.
“It is not a denial letter,” a FEMA spokesman said in an email to The Bond Buyer. “FEMA and the Department of Treasury continue to work with the Commonwealth of Puerto Rico in consultation with the Puerto Rico Financial Oversight and Management Board to move toward a liquidity-focused CDL for the Commonwealth of Puerto Rico and its agencies.”
Local, state and territorial governmental units in Puerto Rico, the U.S. Virgin Islands, Texas and Florida are eligible to apply for portions of a $4.9 billion Community Disaster Loan approved by Congress last year as a part of a package of hurricane disaster aid.
But Puerto Rico’s expected allocation is not immediately needed because the commonwealth reported on Dec. 29 that its central cash balance was $1.7 billion, said the letter, a copy of which was obtained by The Bond Buyer.
Puerto Rico officials estimated in late September that because of the devastating impact of Hurricanes Irma and Maria they would exhaust their operating funds by Oct. 31.
“It is our understanding that the higher than expected central cash balance three months after the hurricanes resulted from greater-than-expected receipts, strategic management of payables and the structure of relief funds from FEMA and other federal agencies, among other factors, although a review of the underlying detail is underway,” the letter said.
The letter also noted that the territory reported on Dec. 18 that it had $6.875 billion in unrestricted and restricted cash on deposit in over 800 accounts across the commonwealth's governmental entities.