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UPDATE 3-Puerto Rico oversight panel asks for draft turnaround plan by Dec. 22
October 31, 2017 / 1:31 PM / 23 days ago

UPDATE 3-Puerto Rico oversight panel asks for draft turnaround plan by Dec. 22

(Adds detail from oversight board meeting)

By Nick Brown

Oct 31 (Reuters) - The federal board overseeing Puerto Rico’s finances on Tuesday asked the bankrupt U.S. territory to submit a new fiscal turnaround plan by Dec. 22, taking into account damage caused by Hurricane Maria.

Speaking at the board’s public meeting in San Juan, Executive Director Natalie Jaresko said the board would approve or reject the revised draft by Jan. 12.

The meeting, the first since Maria made landfall on Sept. 20, is a shift back to focusing on Puerto Rico’s troubled finances, which have taken a back seat in recent weeks as the island has tried to recover from the hurricane.

Maria decimated Puerto Rico’s infrastructure, killing at least 50 people and knocking out power to all 3.4 million residents. Six weeks later, just 30 percent of power has been restored.

Tuesday’s meeting began with a prayer, and Puerto Rico’s government liaison to the board, Christian Sobrino, responded during roll call that he was “alive,” instead of the traditional “present.”

Before the storm, the board and Governor Ricardo Rossello had agreed on a 10-year blueprint for how to reverse the island’s decade-long recession and restructure a crushing $72 billion debt load.

But Maria, along with the less-damaging Hurricane Irma, which also struck Puerto Rico in September, “have fundamentally changed Puerto Rico’s reality,” Jaresko said.

The new plan must be for five years instead of 10, and like the original blueprint it should focus on promoting new investment, including through pension reform and corporate tax reform, Jaresko said.

She added that Puerto Rico should submit audited financial statements for fiscal year 2015 by Dec. 31.

The Puerto Rico government had no immediate comment.

POWER STRUGGLE

Tuesday’s meeting came amid a power struggle between Rossello and the board over control of Puerto Rico’s response to Maria, and its broader strategy for emerging from bankruptcy.

Last week, the board said it planned to appoint retired U.S. Air Force Colonel Noel Zamot as an emergency manager at Puerto Rico’s power utility, PREPA, after the agency was criticized for signing a $300 million, no-bid contract with tiny Whitefish Energy Holdings to lead power restoration.

PREPA on Sunday agreed to cancel the contract after Rossello called for it to be scrapped.

Zamot’s appointment needs confirmation by the judge overseeing Puerto Rico’s bankruptcy, and Sobrino said at the meeting the government would fight it in court.

The appointment would essentially mean the board could replace any Puerto Rican government official, “maybe even the governor,” Sobrino said.

The board on Tuesday also approved a framework giving itself the authority to review future contracts of at least $10 million in the wake of the Whitefish deal.

CASH (AND TARPS) NEEDED

Puerto Rico’s government is running out of cash and needs around $3.6 billion through the end of the year to meet expense requirements after Maria, Gerardo Portela, director of Puerto Rico’s Fiscal Agency and Financial Advisory Authority, said at the meeting.

U.S. Congress has already agreed to give Puerto Rico a $4.9 billion loan to help the government make payroll and pay other bills.

Michael Byrne, acting director of Region II of the Federal Emergency Management Administration, said at the meeting that Puerto Rico homes would need about 60,000 tarpaulins to replace damaged roofs, but that the agency had only installed 3,000 so far.

Byrne stopped short of committing to meeting Rossello’s benchmark of restoring 95 percent of power by mid-December.

“All I can say is that if there’s something to be done, we’re doing it,” Byrne said.

Reporting by Nick Brown and Daniel Bases; Editing by Chizu Nomiyama and Susan Thomas

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