PRASA to Hire Private Operator

Puerto Rico’s Aqueduct and Sewer Authority (PRASA) should have a private sector operator for much of its operations by the end of the year, according to the Director of the territory’s Public-Private Partnerships Authority (P3).

Fermin Fontanez was quoted today as saying that there is a preferred operator among the bidders that responded to an RFP. It would invest $300 million in the system and obtain a 15-year contract.

The company was described as a “global consortium established under U.S. law,” with non-U.S. partners. He said that the identify of the consortium members would not be revealed until a contract is signed.

The agreement would have to be approved by PRASA’s Board of Directors and the PROMESA Financial Board.

P3 Finance Director Cesar Campillo, who is overseeing the transaction, said that the consortium would assume responsibility during a transition of between 120 and 180 days.

It would hire some 700 of PRASA’s approximately 2,000 employees.

A major objective for the firm would be to reduce the amount of unpaid for drinking water produced by PRASA. The amount is estimated to be 60% of PRASA’s production.

The consortium would install ’smart’ meters and make other improvements to increase revenue and decrease costs. Fontanez expressed the hope that it would be possible to eventually decrease rates by 2023.

PRASA rates charged to its 1.2 million plus customers have been raised regularly. Rates were last raised in July. The increases were 2.5% for residential customers, 2.8% for most businesses, 3.5% for industrial users, and 4.5% for government entities.

The PROMESA Board’s fiscal plan for PRASA anticipates $2.3 billion in infrastructure improvements and $435 million in Federal funds over the next five years.