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Puerto Rico power company contract worth $1.5B questioned

DÁNICA COTO

SAN JUAN, Puerto Rico (AP) — A report published Wednesday accused Puerto Rico’s government of giving unfair advantage to a company that obtained a $1.5 billion contract and secured the first large generation project since Hurricane Maria.

The island's power authority disputed the report's claims.

The Ohio-based Institute for Energy Economics and Financial Analysis, a nonprofit research company, said in its report that it obtained documents in part via litigation that show an irregular process leading up to the contract awarded to New Fortress Energy to deliver natural gas.

The report accuses Puerto Rico’s Electric Power Authority of meeting repeatedly with company officials after receiving an unsolicited proposal and providing them with advance information on the two power stations that would start operating on natural gas instead of diesel.

The contract signed in March 2019 “appears to repeat many of the same offenses that has brought the agency and Puerto Rico to its current state of insolvency,” the report said.

The report, which was co-authored by Ingrid Vila Biaggi, a former Puerto Rico chief of staff, also accused the island’s power company of not thoroughly investigating the project’s environmental, safety and health impacts.

“After serious contract and other scandals, PREPA needed to build public confidence that the agency has learned lessons from past mismanagement and scandal. In this case, PREPA has failed,” Tom Sanzillo, the institute’s finance director, said in a statement.

Sanzillo and Biaggi said the government should cancel the contract that attracted bids from six companies and called on law enforcement agencies investigate it.

José Ortiz, executive director of Puerto Rico’s power company, rejected the report and its allegations in a statement to The Associated Press. He said the institute “showed complete ignorance” regarding the contract and how it was awarded, noting it was approved by the federal control board that oversees Puerto Rico’s finances.

A spokesman for the federal control board said there was no immediate comment. The board had previously said that the project would generate $500 million in savings over five years.

The project, backed by $100 million in private funds, was completed last month behind schedule. At the time, Gov. Wanda Vázquez said average monthly savings would range from $8 to $12 a month for residential customers and from $6,000 to $8,000 a month for industrial clients.