II Southeast: Puerto Rico expands toll roads project

David Alvarez, the head of the US territory’s Public-Private Partnership Authority, said at Infrastructure Investor: Southeast that Puerto Rico will add two more roads, PR 5 and PR 20, into the package of toll roads it will offer in its toll roads PPP. He called the project a ‘systemwide’ PPP for the island’s toll roads.

Puerto Rico is expanding the package of roads it will include in its toll roads public-private partnership, David Alvarez, the head of the US territory’s Public-Private Partnership Authority said today.

Alvarez told delegates gathered at the Infrastructure Investor: Southeast forum that there are two other Puerto Rican roads – the PR 5 and the PR 20 – that the territory will include in the package of toll roads that it will upgrade under a public-private partnership (PPP).

Including these roads, Puerto Rico’s toll roads PPP will cover all the toll roads in Puerto Rico’s road network.

“We have taken a systemwide approach,” Alvarez said.

PR 5 is the main highway in San Juan, the Puerto Rican capital, while PR 20 is a highway in the northern municipality of Guayanabo. PR 5 and PR 20 connect to two other roads, PR 22 and PR 52, respectively, that Puerto Rico was already including the toll road PPP along with PR 66 and PR 53.

Puerto Rico will divide the toll roads in its PPP into several phases, based on the type of investment they represent. Some of them will be brownfield projects, meaning that they are existing roads that Puerto Rico will offer to lease to the private sector in exchange for a fee, while others will be greenfields, or new-construction projects. There will also be mixed brownfield-greenfield projects.

PR 22 and PR 5 will be offered in phase one of the brownfield portion of the PPP, while PR 52 and PR 20 will be offered in phase two of the brownfield portion.

The PR 66 is a mixed greenfield-brownfield which will be tendered in a separate phase of the toll roads PPP along with another toll road, the PR 53.

Eventually, the project will move to a greenfield-only phase, where Puerto Rico will tender a project to build an extension to the PR 22.

A request for qualifications for the PR 22 and PR 5 brownfield portion of the PPP is now being drafted. But there are other PPP opportunities that Alvarez highlighted for delegates at the Southeast forum, including a long-term lease of Puerto Rico’s Luis Munoz Marin International Airport in San Juan.

Alvarez said he believes the airport, already the busiest in the Caribbean, can accommodate up to 8 million passengers a year, instead of the current 5 million. He also said there is under-utilised space at the airport that could be put to better use. Maximising passenger traffic and use of space would make the airport more to investors who would be asked to price the airport’s cashflows over the term of the lease, which could reach up to 75 years.

Puerto Rico is also drafting a request for proposals for two other projects. One request will ask the private sector to design, build, finance, operate and maintain a 270 megawatt natural gas power plant in Costa Sur on the island’s southern coast. The other request will ask a private investor to come up with a water metering technology that will help Puerto Rico better measure its water use.

“63 percent of water in Puerto Rico goes unbilled,” Alvarez said. The improved metering technology will “will provide substantial relief to the water company in Puerto Rico”.

Alvarez added that Puerto Rico is “an island of opportunities” for infrastructure investors and the PPP Authority is eager to close its first project.

“We cannot wait for our first success story,” he said.