HAVANA (AP) — Mediation talks to restructure more than $9 billion in debt held by Puerto Rico’s electric utility have failed, officials said Saturday, raising concerns about the future of the bankrupt government agency.
A federal board of control that oversees Puerto Rico’s finances said the standoff with bondholders means it will resume legal action against them in a bid to restructure the debt, warning that any costs associated with repaying the debt would be passed on to consumers.
Governor Pedro Pierluisi said the mediation did not achieve the desired outcome: “My administration cannot agree to an agreement that unduly strains the pocketbooks of our hard-working families, or the resources businesses need to fuel our economy and create and maintain jobs on the island. .”
At a press conference on Saturday, Pierluisi said the power company would remain bankrupt given ongoing litigation.
Creditors could not immediately be reached for comment.
Board member Justin Peterson slammed the board for abandoning mediation efforts as it advocated for bondholders to be paid and said a deal to end bankruptcy and avoiding costly and time-consuming litigation “was clearly within reach”.
“This would have catalyzed much-needed private sector investment to rebuild and modernize Puerto Rico’s grid and provide citizens…cleaner, more reliable and more affordable energy,” he said. “Now this could all be delayed for years.”
Puerto Rico’s power grid remains fragile after Hurricane Maria leveled it in 2017, with outages reported daily. The network was already crumbling before the storm hit due to aging infrastructure and lack of maintenance.
The collapse of the talks comes after Governor Pedro Pierluisi announced in early March that his administration was scrapping a proposed debt restructuring deal for the island’s Electric Power Authority that had been in the works for several years because it was not feasible or in Puerto Rico’s best interest.
The power company’s debt is the largest of any government agency, and economists said its restructuring would help boost economic development on an island mired in a deep economic crisis.
It is one of two government agencies whose debt has yet to be restructured more than five years after Puerto Rico’s government filed the largest municipal bankruptcy in history. Puerto Rico’s Highways and Transportation Authority still holds $5.8 billion in debt.