Puerto Rico’s power company will begin shutting down as soon as Friday if it doesn’t receive a $1 billion loan from the territory’s central government, threatening to cause widespread electricity outages across the hurricane-devastated island, a lawyer for Puerto Rico told a U.S. judge, Bloomberg News reported. The injection of cash from the bankrupt government will allow the Puerto Rico Electric Power Authority, called Prepa, to keep running while it waits for President Donald Trump’s administration to release disaster-recovery loans approved by Congress. Without it, the company may be forced to begin rolling outages within weeks, said Joseph Davis, an attorney for Puerto Rico. Damage from Hurricane Maria in September decimated the power grid, leaving some residents without power for months after the storm. The damage has also intensified the financial squeeze on the government-run utility, whose revenue was decreased as customers went without electricity. Governor Ricardo Rossello said yesterday that PREPA is set to run out of cash within three weeks. The loan would prevent a humanitarian crisis, he said, and possibly allow the commonwealth to access the federal loans that have been held up since Trump’s administration said Puerto Rico’s government may have too much cash on hand to warrant the assistance yet. Read more.
In related news, Puerto Rico Governor Ricardo Rosselló said yesterday that he expects the bankrupt island’s oversight board to certify his revised fiscal plan in “the next couple of days,” Reuters reported. Aimed at putting the U.S. territory on a path to economic recovery, Rosselló’s latest plan, introduced on Tuesday, has already drawn opposition from a large group of creditors. Rosselló said that his ability to address creditors’ broad concerns was limited by the Title III court restructuring process. That court case, or negotiations around it, will ultimately be used to hash out specific debt repayment terms, he said. Following the release of the revised plan, which taps federal money and turns a deficit into a modest surplus, the price on Puerto Rico’s benchmark GO bond is on a third straight day of significant gains on heavy volume. Read more.