HAVANA (AP) — Mediation talks to restructure more than $9 billion in debt held by Puerto Rico’s power company failed, officials announced Saturday, raising concerns about the future of the bankrupt government agency.
A federal control board that oversees Puerto Rico’s finances said the impasse with bondholders means it would resume litigation against them in an attempt to restructure the debt, warning that any cost associated with debt repayment would be passed along to consumers.
Gov. Pedro Pierluisi said the mediation did not achieve the desired outcome: “My administration cannot accept a deal that unduly strains the wallets of our hard-working families, or the resources businesses need to fuel our economy and create and maintain jobs on the island.”
In a press conference on Saturday, Pierluisi said the power company will remain in a state of bankruptcy given pending litigations.
Creditors could not be immediately reached for comment.
Board member Justin Peterson criticized the board for abandoning mediation efforts as he advocated for bondholders to be paid and said that a deal to end bankruptcy and avoid expensive and lengthy litigation “was clearly in reach.”
“It would have catalyzed much-needed private sector investment to rebuild and modernize Puerto Rico’s grid and would have provided the citizens…with cleaner, more reliable and more affordable power,” he said. “Now, all of this could be delayed for years.”
Puerto Rico’s power grid remains frail after Hurricane Maria razed it in 2017, with outages reported daily. The grid was already crumbling before the storm hit as a result of aging infrastructure and a lack of maintenance.
The failed talks come after Gov. Pedro Pierluisi announced in early March that his administration was scrapping a proposed debt restructuring deal for the island’s Electric Power Authority that was several years in the making because it wasn’t feasible or in Puerto Rico’s best interest.
The power company’s debt is the largest of any government agency, and economists have said that restructuring it would help boost economic development on an island mired in a deep economic crisis.
It is one of two government agencies whose debt have yet to be restructured more than five years after Puerto Rico’s government filed for the largest municipal bankruptcy in history. Puerto Rico’s Highways and Transportation Authority still holds $5.8 billion in debt.