The Financial Oversight and Management Board for Puerto Rico, created under the federal PROMESA law, reiterated this week that it acted correctly in approving and then revoking the $5.9 billion, ten-year contract between the Puerto Rico Electric Power Authority (PREPA; AEE in Spanish) and Power Expectations LLC, Enchanted Rock LLC and Reyes Contractor LLC for temporary power generation. The Board says it always had doubts about the contract and authorized it only after certain security commitments.
It says the modifications tied to the allegedly fraudulent acts came after its approval. "It is significant that the alleged fraud and forgery occurred after the Oversight Board’s review, and we have referred the matter to federal authorities," the Board said in a press release. The Board also said its role is not to contract and that the government has an obligation to vet its counterparties.
It called the revocation inevitable and in the interest of the people of Puerto Rico, and said it acted against the explicit objection of the government’s public procurement agency. The statements follow remarks by an investment fund that used the Power Expectations controversy to insist on payment of $12 billion in debt. The Board argued those claims would harm the rebuilding and maintenance of Puerto Rico’s energy system, saying hedge funds continue to keep PREPA from exiting its bankruptcy-like Title III process under PROMESA.