The Financial Oversight and Management Board for Puerto Rico has revoked its approval of a USD 5.9 billion, 10-year contract to deploy temporary power generation for the Puerto Rico Electric Power Authority. The board withdrew approval after learning that the contract had changed following its review, despite the explicit objection of the government procurement agency. It also referred alleged fraud and forgery associated with the matter to federal law enforcement. The board had initially approved the contract only after requiring safeguards to protect Puerto Rico’s interests. It emphasized that it neither participated in the contract nor led the procurement, and that its review under the Puerto Rico Oversight, Management, and Economic Stability Act assesses whether government contracts promote market competition and align with the approved fiscal plan. Government contracting parties remain responsible for vetting counterparties. The board also accused certain hedge fund bondholders of using the procurement dispute to pursue USD 12 billion from the Puerto Rico Electric Power Authority, which it said would impair reconstruction and maintenance of the energy system and impede the utility’s exit from the Title III process.
Financial Oversight and Management Board for Puerto Rico revokes approval of USD 5.9 billion temporary power contract
The Financial Oversight and Management Board for Puerto Rico revoked approval of a USD 5.9 billion, 10-year temporary power generation contract after finding that it had changed following review. The board referred alleged fraud and forgery to federal law enforcement and reiterated that government contracting parties are responsible for vetting counterparties.