The US territory of Puerto Rico has launched an ambitious plan to invest $6.2 billion in the Caribbean island’s infrastructure over the next eight years through the use of public-private partnerships (PPPs). Advisors, investors and developers are being sought to help implement the plan.
More than $4 billion of the plan is expected to go toward 10 high-priority infrastructure projects with target start dates between 2010 and 2011. These include concessions and extensions of key roads, such as PR 22 and PR 66, as well as the construction of new water treatment plants, energy generation plants and a capital improvement plan for the island’s schools.
Puerto Rico Governor
The projects were all submitted to the authority by various Puerto Rico government agencies. To date, 108 projects have been received by the Authority.
“We see this as a pipeline of projects,” Alvarez said, adding that he hopes to contract out at least two to three projects a year starting next year. To help meet this goal, the top 16 projects, including the 10 mentioned above, were showcased last week at an industry forum in the capital of San Juan. Between 600 and 700 PPP industry participants are said to have attended the event.
Puerto Rican economy: lost a decade of growth.
Luis Palazzi, vice president at Abertis USA, the US subsidiary of Spanish concessionaire Abertis Infraestructuras, said he was impressed by what he saw at the event.
“My impression is that [Puerto Rico] is a good place to be now. There they have a clear need for PPPs and they realize that, which is the main difference compared with here in the US,” he said.
Abertis, which owns the only road concession on the island, is primarily interested in road and airport projects in Puerto Rico, Palazzi said.
It's the early days, but they've done a stunningly good job of starting this programme
The key question going forward, he added, is whether the Authority can execute on its vision. He expressed optimism that it can, given that they have “the right team” in place.
Last month, the government announced that it had selected Macquarie Capital, the investment banking arm of Australia’s Macquarie Group, to advise the Authority on implementing its PPP programme. Other advisors are also being sought. Earlier this month, the Authority issued a request for qualifications for legal, engineering and environmental, financial and other advisory services. Responses are due to Alvarez by 6 November.
The programme was launched earlier this year after Puerto Rico Governor Luis Fortuño signed into law Act 29, a PPP-enabling bill that also created the PPP Authority, which is being staffed by the Government Development Bank for Puerto Rico.
I am a firm, unwavering believer in public-private partnerships
Gribbin said one of the tailwinds helping Puerto Rico is the fact that “they don’t have to wrestle with proponents of the traditional procurement system”. Under the traditional system, still the norm in most of the US, governments take on most of the risk of developing and maintaining projects themselves and finance them using municipal debt.
“I’m a firm, unwavering believer in public-private partnerships,” Fortuño told delegates gathered at the industry forum last week, according to prepared remarks that have been posted on the Authority’s website. “I am confident that as we continue to take steps towards establishing partnerships that combine the best from the public and private sectors, we will be able to transform our infrastructure, enhance our global competitiveness and create job opportunities for all Puerto Ricans,” he added.