(Updates with progress of negotiations)
By Nick Brown
NEW YORK, April 13 (Reuters) - Puerto Rico's ailing power authority, PREPA, is still negotiating to extend a forbearance agreement with holders of its $9 billion in debt, though proceedings are not going as quickly as hoped, according to two people close to the talks.
One of the people said the sides are at odds over demands by creditors that any restructuring proposal advanced by PREPA pay its financial creditors in full.
The forbearance agreement, which stops creditors from calling defaults during broader debt restructuring talks, expires on Wednesday, after a previous 15-day extension was reached on March 31.
PREPA has spent months in financial and operational restructuring talks with creditors. Hamstrung by ageing power plants, it needs to modernize, a key element in fixing Puerto Rico's troubled economy.
Earlier on Monday, a source close to the talks told Reuters the sides hoped to secure an extension before PREPA's chief restructuring officer, Lisa Donahue, testifies on Tuesday at a public hearing in Puerto Rico's Senate.
But that looked unlikely as of Monday evening, one source said.
A bondholder group led by Franklin Advisers and OppenheimerFunds has already proposed a plan to restructure PREPA, committing to backstop a $2 billion investment that would include a new, $1.2 billion natural gas facility.
But Donahue has expressed doubts about that plan, and may propose her own. Donahue's team is still assessing the agency's business and capital needs.
(Reporting by Nick Brown; Additional reporting by Edward Krudy; Editing by Dan Grebler and Lisa Shumaker)