Region: North America (NA)
Country: Puerto Rico
Sector: Transportation
Keywords: PPPs by Topic *, Disruption and PPPs **, Puerto Rico, Transport
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Document Summary:
This report introduces the key points for the PPPs in Puerto Rico.
Document Details:
Historically, there has been vigorous debate among the residents of Puerto Rico for and against the privatization of public property and public services. The public-private partnership (P3 or P3s) model established by the Public-Private Partnership Act of 2009, as amended (the P3 Act) and its Regulation for the Procurement, Evaluation, Selection, Negotiation and Award of Public-Private Partnership Contracts are gaining acceptance as a tool for meeting Puerto Rico’s infrastructure needs.
Several factors have strengthened this growing acceptance: not least, Puerto Rico’s current liquidity crunch and lack of market access to finance its activities, coupled with the fact that P3s in Puerto Rico are typically structured not as an outright sale but as long-term leases or concessions, at the end of which the use of the asset is returned to the government. In seeking to finance infrastructure projects and provide multiple public services, the Government of Puerto Rico currently regards P3s as a sensible alternative.
Furthermore, the Puerto Rico Oversight, Management and Economic Stability Act, Pub. L. 114-187 (PROMESA − see our alert), adopted by the US Congress and signed into law by President Barack Obama on June 30, 2016, has strengthened the call for P3s on the island. Article V of PROMESA, titled “Puerto Rico Infrastructure Revitalization,” is exclusively dedicated to establishing an expeditious way to promoting future infrastructure projects. Under PROMESA, a fiscal oversight board (the Oversight Board) was recently instituted. A Revitalization Coordinator was also appointed. The Revitalization Coordinator has been tasked with identifying and coordinating the expedited execution of “Critical Projects.” Critical Projects are defined by PROMESA as “…those intimately related to addressing an emergency whose approval, consideration, permitting, and implementation shall be expedited and streamlined…” Critical Projects include energy and alternative energy projects. The new administration of Governor Ricardo Rosselló has also made it clear that it will prioritize P3 projects. In fact, the first law enacted by the Rosselló administration on January 11, 2017 was to amend the P3 Act to expand both the options available to submit proposals and participation in P3s.
It appears, in sum, that a number of P3 projects are on the horizon for Puerto Rico. For those considering participating in such projects, this handbook summarizes the applicable legal framework governing P3s in Puerto Rico and discusses why Puerto Rico is a favorable jurisdiction for entering into P3s.
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